area handbook series 

Paraguay 

a country study 




1 



Paraguay 

a country study 



Federal Research Division 
Library of Congress 
Edited by 
Dennis M. Hanratty 
and Sandra W. Meditz 
Research Completed 
December 1988 



On the cover: Nanduti lace 



Second Edition, 1990; First Printing, 1990 

Copyright ®1990 United States Government as represented by 
the Secretary of the Army. All rights reserved. 

Library of Congress Cataloging-in-Publication Data 

Paraguay: A Country Study 

Area Handbook Series (DA Pam. 550-156) 
Research completed December 1988. 
Bibliography: pp. 255-270. 
Includes index. 

1. Paraguay. I. Hanratty, Dennis M., 1950- . II. Meditz, 
Sandra W., 1950- . III. Library of Congress. Federal Research 
Division. IV. Series. V. Series: DA Pam. 550-156. 

F 2668. P24 1990 989.2-dc20 89-600299 



Headquarters, Department of the Army 
DA Pam 550-156 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C. 20402 



Foreword 



This volume is one in a continuing series of books now being 
prepared by the Federal Research Division of the Library of Con- 
gress under the Country Studies — Area Handbook Program. The 
last page of this book lists the other published studies. 

Most books in the series deal with a particular foreign country, 
describing and analyzing its political, economic, social, and national 
security systems and institutions, and examining the interrelation- 
ships of those systems and the ways they are shaped by cultural 
factors. Each study is written by a multidisciplinary team of social 
scientists. The authors seek to provide a basic understanding of 
the observed society, striving for a dynamic rather than a static 
portrayal. Particular attention is devoted to the people who make 
up the society, their origins, dominant beliefs and values, their com- 
mon interests and the issues on which they are divided, the nature 
and extent of their involvement with national institutions, and their 
attitudes toward each other and toward their social system and 
political order. 

The books represent the analysis of the authors and should not 
be construed as an expression of an official United States govern- 
ment position, policy, or decision. The authors have sought to 
adhere to accepted standards of scholarly objectivity. Corrections, 
additions, and suggestions for changes from readers will be wel- 
comed for use in future editions. 

Louis R. Mortimer 
Acting Chief 

Federal Research Division 
Library of Congress 
Washington, D.C. 20540 



111 



Acknowledgments 



The authors wish to acknowledge the contributions of Thomas E. 
Weil, Jan Knippers Black, Howard I. Blutstein, David S. 
McMorris, Frederick P. Munson, and Charles Townsend, who 
wrote the 1972 edition of the Area Handbook for Paraguay. Portions 
of their work were incorporated into the present volume. 

The authors are grateful to individuals in various agencies of 
the United States government and private institutions who gave 
their time, research materials, and special knowledge to provide 
information and perspective. None of these agencies or institutions 
is in any way responsible for the work of the authors, however. 

The authors also wish to thank those who contributed directly 
to the preparation of the manuscript. These include Richard F. 
Nyrop, who reviewed all drafts and served as liaison with the spon- 
soring agency; Barbara Dash, Deanna D'Errico, Vincent Ercolano, 
Richard Kollodge, and Sharon Schultz, who edited the chapters; 
Martha E. Hopkins, who managed editing and production; and 
Barbara Edgerton, Janie L. Gilchrist, and Izella Watson, who did 
the word processing. Catherine Schwartzstein performed the final 
prepublication editorial review, and Shirley Kessel of Communi- 
cators Connection compiled the index. Linda Peterson and Malin- 
da Neale of the Library of Congress Printing and Processing Section 
performed phototypesetting, under the supervision of Peggy Pixley. 

David P. Cabitto, who was assisted by Sandra K. Cotugno and 
Kimberly A. Lord, provided invaluable graphics support. Susan M. 
Lender reviewed the map drafts, which were prepared by Harriett R. 
Blood, David P. Cabitto, and Sandra K. Cotugno. Sandra K. 
Cotugno also deserves special thanks for designing the illustrations 
for the book's cover and the title page of each chapter. 

The authors also would like to thank several individuals who 
provided research support. Arvies J. Staton supplied information 
on military ranks and insignia, and Karen M. Sturges-Vera wrote 
the section on geography in Chapter 2. 

Finally, the authors acknowledge the generosity of the individuals 
and the public and private agencies who allowed their photographs 
to be used in this study. We are indebted especially to those who 
contributed original work not previously published. 



v 



Contents 



Page 

Foreword iii 

Acknowledgments v 

Preface xi 

Country Profile xiii 

Introduction xxi 

Chapter 1. Historical Setting 1 

Richard S. Sacks 

DISCOVERY AND SETTLEMENT 5 

Early Explorers and Conquistadors 5 

The Young Colony 7 

The Sword of the Word 11 

INDEPENDENCE AND DICTATORSHIP 14 

Struggle with the Portenos 14 

The Rise of Jose Gaspar Rodriguez de Francia 17 

El Supremo Dictador 20 

DICTATORSHIP AND WAR 22 

Carlos Antonio Lopez 22 

Francisco Solano Lopez 25 

The War of the Triple Alliance 27 

LIBERALS VERSUS COLORADOS 29 

The Postwar Period 29 

The First Colorado Era 31 

Liberal Decades 32 

The Chaco War and the February Revolution 35 

Morinigo and World War II 38 

THE STRONATO 41 

The 1954 Coup . 41 

Consolidation of the Stroessner Regime 42 

International Factors and the Economy 44 

Toward the 1980s 47 

Chapter 2. The Society and Its Environment .... 51 

Patricia Kluck 

GEOGRAPHY 54 

External Boundaries 54 

Natural Regions 55 



vii 



Drainage 58 

Climate 59 

POPULATION 61 

SOCIAL RELATIONS 63 

Family and Kin 65 

Ritual Kinship 68 

RURAL SOCIETY 70 

MIGRATION AND URBANIZATION 74 

RELIGION IN SOCIETY 78 

MINORITY GROUPS 80 

Immigrants 81 

Indians 84 

EDUCATION 89 

HEALTH AND WELFARE 92 

Chapter 3. The Economy 97 

Daniel Seyler 

GROWTH AND STRUCTURE OF THE 

ECONOMY 100 

ECONOMIC POLICY 105 

Fiscal Policy 105 

Monetary Policy 108 

Exchange-Rate Policy 110 

LABOR Ill 

AGRICULTURE 113 

Land Tenure 113 

Land Reform and Land Policy 115 

Land Use 116 

Crops 118 

Farming Technology 122 

Livestock 125 

Forestry and Fishing 128 

ENERGY 129 

Electricity 130 

Petroleum 135 

Renewable Energy Resources 136 

INDUSTRY 136 

Manufacturing 137 

Construction 140 

SERVICES 142 

Financial System 142 

Tourism 145 

Transportation 145 

Communications 149 



viii 



EXTERNAL SECTOR 149 

External Trade 149 

Balance of Payments and Debt 152 

Foreign Assistance 155 

Chapter 4. Government and Politics 157 

Thomas C. Bruneau 

THE GOVERNMENTAL SYSTEM 160 

Constitutional Development 160 

The Executive 163 

The Legislature 165 

The Judiciary 168 

Local Government 169 

The Electoral System 169 

POLITICAL DYNAMICS 170 

The Twin Pillars of the Stroessner Regime 171 

Opposition Parties 177 

Political Developments Since 1986 180 

Interest Groups 184 

The Media 191 

FOREIGN RELATIONS 192 

Argentina and Brazil 192 

The United States 196 

Chapter 5. National Security 201 

Melinda Wheeler Cooke 

THE HISTORY AND DEVELOPMENT OF THE 

ARMED FORCES 205 

THE ARMED FORCES IN THE NATIONAL LIFE 210 

Missions 212 

Manpower 213 

Defense Spending 218 

ARMED FORCES ORGANIZATION, TRAINING, 

AND EQUIPMENT 219 

The Army , 223 

The Navy 226 

The Air Force 228 

PUBLIC ORDER AND INTERNAL SECURITY 229 

Security and Political Offenses 229 

Crime 236 

The Police 238 

The Criminal Justice System 239 

Appendix. Tables 245 



ix 



Bibliography 255 

Glossary 271 

Index 273 

List of Figures 

1 Administrative Divisions of Paraguay, 1988 xx 

2 Southern Viceroyalties, 1776 16 

3 Topography and Drainage 56 

4 Population Density by Department, 1982 62 

5 Population by Age and Sex, 1982 64 

6 Gross Domestic Product (GDP) by Sector, 1986 114 

7 Transportation and Hydroelectric Facilities, 1988 132 

8 Officer Ranks and Insignia, 1988 216 

9 Enlisted Ranks and Insignia, 1988 217 



10 Organization of the Armed Forces of Paraguay, 1988 ... 221 



x 



Preface 



Like its predecessor, this study is an attempt to treat in a com- 
pact and objective manner the dominant social, political, economic, 
and military aspects of contemporary Paraguay. Sources of infor- 
mation included scholarly books, journals, and monographs; offi- 
cial reports of governments and international organizations; numer- 
ous periodicals; and interviews with individuals having special com- 
petence in Paraguayan and Latin American affairs. Chapter bib- 
liographies appear at the end of the book; brief comments on sources 
recommended for further reading appear at the end of each chap- 
ter. Measurements are given in the metric system; a conversion 
table is provided to assist readers unfamiliar with metric measure- 
ments (see table 1, Appendix). A glossary is also included. 

Although there are numerous variations, Spanish surnames 
generally consist of two parts: the patronymic name followed by 
the matronymic. In the instance of Alfredo Stroessner Mattiauda, 
for example, Stroessner is his father's name, Mattiauda, his 
mother's maiden name. In informal use, the matronymic is often 
dropped. Thus, after the first mention, we have usually referred 
simply to Stroessner. A minority of individuals use only the patro- 
nymic. Special rules govern discussion of Francisco Solano Lopez, 
who is referred to throughout this book as Solano Lopez to differen- 
tiate him from his father, Carlos Antonio Lopez. 



xi 



Country Profile 




Country 

Formal Name: Republic of Paraguay (Republica de Paraguay). 

Short Form: Paraguay. 

Term for Citizens: Paraguayan(s). 

Capital: Asuncion. 

Geography 

Size: 406,750 square kilometers. 

Topography: Divided by Rio Paraguay into eastern Paranefia and 
western Chaco regions. Paranefia landform ranges from lowlands 
to mountains, highest elevations occurring near border with Brazil. 



xiii 



Chaco's vast low plain — more than 60 percent of Paraguay's total 
land area — alternately flooded and parched. About 95 percent of 
population concentrated in Paranena. 

Climate: Subtropical, humid climate in Paranena with abundant 
rainfall evenly distributed throughout the year. Tropical climate 
in Chaco with distinct wet and dry seasons. Modest seasonal vari- 
ations in temperature in both regions. 

Society 

Population: 1988 population estimates ranged from 4 to 4.4 mil- 
lion; rate of annual growth estimated at from 2.5 to 2.9 percent 
in the late 1980s. 

Education and Literacy: Compulsory attendance to age fourteen 
or completion of six-year primary level. Three-year secondary edu- 
cation programs offered in humanities or technical training. Univer- 
sity studies available through two institutions, one state- sponsored 
and the other operated by the Roman Catholic Church. Official 
literacy rate estimated at over 80 percent in the mid-1980s. 

Health: Most people had ready access to medical care of some kind; 
nonetheless, system's overall effectiveness limited by inadequate 
funding, supplies, service coordination, and data collection, as well 
as heavy concentration of medical personnel in urban areas. In the 
late 1980s, life expectancy at birth sixty-nine for females and sixty- 
five for males. 

Languages: Guaram recognized as national language and spoken 
by approximately 90 percent of people in late 1980s. Spanish offi- 
cial language but understood by only 75 percent of the population. 
Portuguese predominant in area near Brazilian border. 

Ethnic Groups: In the late 1980s, approximately 95 percent of 
population was mestizo; remainder were Indians, Asians, or whites. 
In 1970s and 1980s, substantial immigration of Brazilians, Koreans, 
and ethnic Chinese. 

Religion: Estimated 92 to 97 percent of the population were Ro- 
man Catholics in 1980s; remainder Mennonites or other Protes- 
tant groups. 

Economy 

Gross Domestic Product (GDP): Approximately US$3.4 billion 
in 1986, roughly US$1,000 per capita. Substantial growth recorded 



xiv 



in late 1970s, followed by decline in early 1980s and some recov- 
ery in mid- to late 1980s. 

Agriculture: About 23 percent of GDP in 1985; also accounted 
for approximately half of all employment and virtually all export 
earnings. In 1981 about 7 percent of land dedicated to crop produc- 
tion, 20 percent to forestry, 26 percent to livestock, and 47 per- 
cent to other purposes. Main crops — soybeans, cotton, tobacco, 
coffee, sugarcane, oilseeds, manioc (cassava), corn, beans, peanuts, 
and wheat. Highly skewed distribution of land. 

Industry: About 23 percent of GDP in 1986, including manufac- 
turing (over 16 percent of GDP) and construction (nearly 6 per- 
cent of GDP). Manufacturing generally small-scale and focused 
on consumer goods. Construction activity fluctuated dramatically 
during the mid- to late 1980s following several years of brisk growth. 

Energy: Less than 3 percent of GDP in 1986, but tremendous 
hydroelectric growth potential. Expected to become world's larg- 
est exporter of electricity in 1990s. 

Services: About 51 percent of GDP in 1986. Included financial 
services, transportation and communications, informal services, 
government services, and tourism. 

Imports: Approximately US$898 million in 1986, over 40 percent 
of which unregistered. Imports mainly manufactured products, cap- 
ital goods, and fuels. 

Exports: Approximately US$371 million in 1986, almost 40 per- 
cent of which unregistered. Soybeans and cotton over 60 percent 
of exports. 

Balance of Payments: Acute balance of payments situation in late 
1980s, result of an increasing merchandise trade deficit and a 
decreased level of private capital investment. International reserves 
equalled less than four months of imports. From 1980 to 1987, 
indebtedness more than doubled, to roughly US$2 billion. Debt 
as a percentage of GDP climbed to above 50 percent. Debt 
restructuring under way in 1989. 

Exchange Rate: Guarani (G) pegged to United States dollar from 
1960 to 1982 but devalued numerous times during the mid- to late 
1980s. Five exchange rates in use in 1987, reduced to three in 
mid-1988. Free-market rate exceeded G1,000 = US$1 by early 
1989. Multiple exchange-rate system abolished in mid- 1989. 

Fiscal Year: Calendar year. 



xv 



Fiscal Policy: Substantial cutbacks in current and capital expen- 
ditures in mid-1980s resulted in 1986 budget deficit under 1 per- 
cent of GDP. In 1986 public- sector deficit reached 7 percent of GDP 
because of parastatals' poor financial performance and access to 
preferential exchange rates. 

Transportation and Communications 

Roads: In late 1980s, over 15,000 kilometers, 20 percent paved. 
Most important paved roads linked Asuncion to Puerto Presidente 
Stroessner and Encarnacion. Trans-Chaco Highway, 700 kilome- 
ters long, under construction. 

Railroads: Outdated 367-kilometer passenger and cargo line 
between Asuncion and Encarnacion; also small cargo line near 
Brazilian border. 

Ports: Ten ports, the most important being Asuncion and Villeta. 
Brazilian ports of Santos and Paranagua also handled substantial 
amount of Paraguayan goods via an overland route from Puerto 
Presidente Stroessner. 

Airports: Only all-weather airports at Asuncion, which handled 
all international flights, and Mariscal Estigarribia. 

Telecommunications: Poor communications and domestic tele- 
phone services; adequate international service. 

Government and Politics 

Government: Central government divided into three branches: 
executive, legislative, and judiciary. Under provisions of Consti- 
tution of 1967, chief executive is president of the republic, elected 
by popular vote for five-year term. Within twenty-four hours of 
president's resignation, death, or disability, the legislature and an 
advisory body, the Council of State, designate a provisional presi- 
dent. If at least two years of term have elapsed, provisional presi- 
dent serves out full term. If fewer than two years have elapsed, 
elections are to be held within ninety days. Legislature consists of 
Senate with at least thirty members and Chamber of Deputies with 
at least sixty members, plus alternates. Members popularly elected 
for five-year terms that run concurrently with presidential term. 
Highest court in judiciary is Supreme Court of Justice made up 
of at least five members who serve five-year terms after nomina- 
tion by president and ratification by legislature. Lower courts 
include appellate courts, courts of first instance, justice of the peace 
courts, and military courts. Central government exerts complete 



xvi 



control over local administration, which consists of nineteen 
departments. 

Politics: On February 3, 1989, Major General Andres Rodriguez 
named provisional president after leading military coup against 
President Alfredo Stroessner Mattiauda. Rodriguez easily won a 
presidential election held on May 1, 1989. Military's action con- 
sistent with Paraguay's authoritarian style of politics, a tradition 
that began with dictator Jose Gaspar Rodriguez de Francia (ruled 
1814-40) and continued in an unbroken line to Stroessner him- 
self, who came to power in a 1954 coup. As candidate of the Na- 
tional Republican Association-Colorado Party (Asociacion Nacional 
Republicana-Partido Colorado), Stroessner elected to eight con- 
secutive terms as country's president in elections that observers 
characterized as fraudulent. Beginning in mid-1980s, Colorado 
Party broke into militant and traditionalist factions. Stroessner sided 
with militants and purged traditionalists from government. 
Rodriguez, an ally of traditionalists, purged militants. In contrast 
to Stroessner, Rodriguez allowed all noncommunist opposition par- 
ties to compete in May 1989 elections. 

International Relations: Traditionally dominated by dependence 
on Argentina to ensure access to the port of Buenos Aires. Stroessner 
changed course of Paraguayan foreign policy and built close rela- 
tions with Brazil. Although ties with Stroessner not as close since 
onset of democratization in Brazil in mid-1980s, massive scale of 
Brazilian investment in Paraguay precluded significant change in 
relations. Rodriguez strengthened ties with both Argentina and 
Brazil. Relations with United States had been strained since early 
1980s because of United States concerns over Paraguayan corrup- 
tion, narcotics trafficking, and human rights abuses; relations 
improved following Rodriguez's assumption of the presidency. 

International Agreements and Memberships: Party to Inter- 
American Treaty of Reciprocal Assistance (Rio Treaty) and Treaty 
for the Prohibition of Nuclear Weapons in Latin America 
(Tlatelolco Treaty). Also a member of Organization of American 
States, United Nations and its specialized agencies, World Bank, 
International Monetary Fund, Inter-American Development Bank, 
and Latin American Integration Association. 

National Security 

Armed Forces: Includes army, navy, and air force with total 
strength estimated at 19,500 in 1988. Army organized into three 



xvn 



corps (eight infantry divisions and one cavalry division) and com- 
bat support, logistical support, and instructional commands. Navy 
organized into fleet units, naval aviation arm, marine battalion, 
and coast guard. Air force organized into three squadrons and one 
paratroop battalion. 

Equipment: Ground forces armaments mostly obsolete United 
States equipment, but also included newer Brazilian armored 
vehicles and armored personnel carriers. Most of naval fleet anti- 
quated. Air force's only combat airplanes eight Brazilian light coun- 
terinsurgency aircraft. 

Police: Police force under administration of minister of interior; 
army officers held many key positions in police hierarchy. In 1988 
over half of estimated 8,500 personnel assigned to Asuncion. 



xvm 



Pablo Lagerenza 
CHACO 



\General Eugenio A. Garay 
NUEVA ASUNCION 



r 



Fuerte Olimpo Jj 



ALTO 
PARAGUAY 



>Dr. Pedro P. Pena 
m. BOQUERON 



Vedro Juanx 
y Caballeroi-y 



PRESIDENTE HAYES 



CONCEPCION 



\ Conception ^AMAMBAy 
*Pozo Colorado ^ — ' ' - u JS 



I SanPedro \CANENDIYU del fj 



■ SAN PEDRO 



Guaira VN 

r ^ y !alto 

QORVILLERAj CAAGUAZU "V fl 



International boundary 
Department boundary 
National capital 
Department capital 



25 50 100 Kilometers 



|g) b^aguptjcorpnel Oviedoj^-J A 

W L rp a ? a *" *V ' Yiil?rfc£&S Puerto M 
/"Y guar/ £uAm.'' P ^f[ dente : 
■| PARAGUARl y •Caazapa-y'y-.^.lM 
lit ^- /"^^"CAAZAPA,-^" JH 

yi UCU ^' ) -MISIO / NES lit 



Figure 1. Administrative Divisions of Paraguay, 1988 



xx 



Introduction 



ON THE NIGHT OF FEBRUARY 2, 1989, the streets of Asun- 
cion became a battleground as forces loyal to First Corps commander 
Major General Andres Rodriguez staged a coup d'etat against the 
government of President Alfredo Stroessner Mattiauda. Tank units 
of the First Cavalry Division left their Nu Guazu barracks and bom- 
barded the headquarters of the armed forces general staff, the police, 
and the Presidential Escort Regiment. Elements of the air force's 
composite squadron also reportedly joined the rebels and carried 
out aerial attacks. After several hours of heavy fighting, Stroessner 
surrendered and offered his " irrevocable resignation from the post 
of president of the Republic of Paraguay and from the post of com- 
mander in chief of its armed forces" — positions that he had held 
since 1954. Typically for Paraguay, the coup was not a bloodless 
affair; estimates of the number killed ranged from Rodriguez's claim 
of 27 to Western observers' assertions of up to 300. 

During the fighting, the First Cavalry Division seized one of 
Asuncion's radio stations and broadcast an appeal by Rodriguez 
to the people of Paraguay. The military had left its barracks, the 
general asserted, "to defend the dignity and honor of the armed 
forces, for the total and complete unification of the Colorado Party 
(Asociacion Nacional Republicana-Partido Colorado) in govern- 
ment, for the initiation of democratization in Paraguay, for respect 
for human rights, and for respect for our Christian, apostolic, 
Roman Catholic religion." In fact, the coup was actually a strug- 
gle for political control of a post-Stroessner Paraguay. 

Relying on a system of coercion and cooptation, Stroessner had 
brought remarkable political stability to a nation that experienced 
over twenty coups between 1870 and 1954 (see Liberals Versus 
Colorados, ch. 1). Stroessner's skillful use of the ruling Colorado 
Party as a dispenser of jobs and patronage was a major factor in 
achieving this stability (see The Twin Pillars of the Stroessner 
Regime, ch. 4). Political stability also resulted from twenty years 
of sustained economic growth. This was especially true during the 
1970s, when construction of the Itaipu hydroelectric plant, com- 
pletion of the road from Asuncion to Puerto Presidente Stroessner 
and links to Brazilian Atlantic ports, land colonization along the 
Brazilian border, and increases in agricultural commodity prices 
combined to produce gross domestic product (GDP — see Glossary) 
growth of over 8 percent a year (see Growth and Structure of the 
Economy, ch. 3). 



xxi 



By the mid-1980s, however, compelling signs pointed to the 
twilight of the Stronato, as the Stroessner era was called. Real GDP 
declined in 1982 and 1983 following the completion of most con- 
struction at Itaipu and the drop in commodity prices. Foreign 
governments increasingly condemned and isolated the Stroessner 
regime for its repression of the political opposition and its reliance 
on electoral fraud (see Foreign Relations, ch. 4). In addition, 
Stroessner turned seventy in 1982 and seemed to lose some of his 
legendary energy and capacity for hard work as he grew older. 

It was not surprising, therefore, that leaders of the Colorado Party 
began to jockey for position. In the mid-1980s, the party's thirty- 
five-member governing board, the National Committee (Junta de 
Gobierno), split into rival militant (militante) and traditionalist (tradi- 
cionalistd) camps. The militants were led by four key members of 
Stroessner' s inner circle: Sabino Au gusto Montanaro, minister of 
interior; Adan Godoy Jimenez, minister of public health and social 
welfare; Jose Eugenio Jacquet, minister of justice and labor; and 
Mario Abdo Bemtez, the president's private secretary. Each of these 
men had personally profited from the Stronato and felt much more 
loyalty to Stroessner personally than to the Colorado Party. These 
militants wanted as little change as possible in any future govern- 
ment. Indeed, many militants promoted air force Lieutenant 
Colonel Gustavo Stroessner Mora as the ideal successor to his father. 
Juan Ramon Chaves, the party's president since the early 1960s, 
headed the traditionalists. Unlike the militants, traditionalist leaders 
came from distinguished families who had dominated the Colo- 
rado Party prior to Stroessner. Although loyal collaborators 
throughout the Stronato, traditionalists also believed that continued 
reliance on repression would spell doom for the Colorado Party. 

Although the militant-traditionalist split had been brewing since 
the mid-1980s, it burst into public prominence with the party's 
National Convention in August 1987. Montanaro employed the 
police to deny traditionalists access to the convention hall, thus en- 
suring his election as party president and the elections of Abdo 
Bemtez, Godoy, and Jacquet as the three vice presidents. Stroess- 
ner, who had largely remained above the fray, soon endorsed the 
militants' takeover of the party. The militants continued their purge 
of the traditionalists over the next year, excluding them from the 
slate of Colorado Party congressional candidates for the February 
1988 election, removing them from key positions within the govern- 
ment, and subjecting them to torrents of abuse in the national media 
(see Political Developments Since 1986, ch. 4). 

Although clearly in control, the militants stumbled badly in late 
1988 by becoming embroiled in yet another controversy with the 



xxn 



Roman Catholic Church. In the late 1980s, the church had emerged 
as Stroessner's most important critic. Its newspaper and radio sta- 
tion broadcast accounts of human rights abuses in Paraguay. The 
Catholic bishops also issued numerous pastorals condemning 
government corruption and calling for an end to political violence 
against regime opponents. The government frequently responded 
by harassing or deporting priests (see Religion in Society, ch. 2; 
Interest Groups, ch. 4; Security and Political Offenses, ch. 5). In 
November 1988, however, the militants overstepped the bounds 
of propriety in the eyes of many Paraguayans by leveling a per- 
sonal attack against Anfbal Maricevich Fleitas, the bishop of Con- 
ception and a persistent Stroessner critic. Appearing at a Colorado 
Party rally, National Committee member Ramon Aquino accused 
Maricevich of being a communist-follower and a drunkard, and 
dedicated a bottle of liquor in the name of "Maricewhiskey." 
Despite widespread outrage within Paraguay, the militant leader- 
ship strongly endorsed Aquino's right to free expression. Aquino 
soon escalated the conflict by accusing the clergy of being beholden 
to Cuban leader Fidel Castro Ruz and Nicaraguan president Daniel 
Ortega Saavedra. In response, Ismael Rolon Silvero, the archbishop 
of Asuncion, issued a decree barring Aquino from taking an active 
part in any religious ceremony, a measure one step short of 
excommunication. The Aquino episode apparendy convinced many 
among the Paraguayan elites that the militants were too crude and 
unsophisticated to be trusted with the reins of government. 

In addition to the Aquino affair, traditionalists benefited from 
the emergence of Luis Maria Argana as the de facto leader of the 
movement. In August 1988, Argana, an urbane, highly respected 
politician, stepped down from his post as chief justice of the Supreme 
Court of Justice after completing a five-year term of office. Although 
Argana was a known supporter of traditionalism, many recalled 
his ambiguous stance at the August 1987 party convention and won- 
dered if he would challenge the militants. In speeches in Decem- 
ber 1988 and January 1989, however, Argana dispelled those doubts 
as he lashed out at the "imposters" who had seized control of the 
Colorado Party. Accusing the Stroessner government of becom- 
ing a police state, Argana thundered that those who persecute 
defenseless women or beat priests could not be considered Colo- 
rados or even Paraguayans. In response, Aquino accused Argana of 
being a traitor with "blue," i.e., Liberal Party (Partido Liberal), 
blood. Argana' s statements gave new vitality to a movement that 
had been stagnating under the control of the octogenarian Chaves. 

Although the militant-traditionalist battle dominated the head- 
lines, the party's factions tacitly understood that the armed forces 



xxiii 



remained the ultimate arbiters of Paraguay's future. The armed 
forces, especially the senior officer corps, allegedly had benefited 
handsomely during the Stronato from involvement in a variety of 
legal and illegal businesses. Nonetheless, however, many in the 
armed forces' upper echelon remained wary of the militants. In 
the late 1980s, observers felt that the army was particularly op- 
posed to the idea of Stroessner's being succeeded by his son. Selec- 
tion of an undistinguished air force officer as commander in chief 
would have challenged the army's status as the preeminent ser- 
vice and also might have necessitated the retirement of many senior 
officers. 

Both sides in the Colorado Party power struggle also knew that 
General Rodriguez's views would be critical in determining the 
military's stance. At first glance, Rodriguez seemed an unlikely 
obstacle in the militants' path. As a young regimental commander 
in December 1955, Captain Rodriguez defied his immediate 
superior and supported Stroessner's preemptive purge against the 
latter' s chief rival at the time, Epifanio Mendez Fleitas. In 1961 
Stroessner selected his protege Rodriguez to head the powerful First 
Cavalry Division. In 1982 Stroessner reorganized the army into 
three corps and chose Rodriguez to command the First — and most 
important — Corps. As a result of this promotion, Rodriguez had 
the best equipped units of the Paraguayan army at his disposal (see 
The Army, ch. 5). The long-time professional bonds between 
Stroessner and Rodriguez were also enhanced by the marriage of 
Stroessner's son Alfredo to Rodriguez's daughter Marta. 

But Rodriguez's long period of service on behalf of the Stronato 
had apparently heightened his interest in the presidency. Rodriguez 
also had close ties with many traditionalist leaders. Finally, Alfre- 
do and Marta's marital problems reportedly strained the relation- 
ship of the two generals. 

Stroessner and the militants thus apparently decided that the suc- 
cess of their plan required the neutralization of Rodriguez. On Janu- 
ary 12, 1989, two weeks after the promotion of his son to the rank 
of colonel, Stroessner announced a major reassignment of military 
commanders. Major General Orlando Machuca Vargas, a key ally 
of Rodriguez, lost his post as Second Corps commander. The com- 
manders of the Fifth and Seventh Infantry Divisions were sacked 
and replaced by officers presumed loyal to Stroessner. Stroessner 
also rotated the commanders of the Third, Fourth, and Sixth 
Infantry Divisions. The day also saw the swearing in of Stroess- 
ner loyalist Brigadier General Alcibiades Ramon Soto Valleau as 
the new commander of the air force. 



xxiv 




One week after the 1989 coup, workers plaster over bullet holes 
and repair the front walls of the Presidential Escort 
Regiment headquarters, Asuncion. 
Courtesy Richard S. Sacks 



XXV 



Stroessner apparently believed that these reassignments had elimi- 
nated Rodriguez's ability to rally his fellow commanders and to 
stage a coup. Thus, the moment seemed propitious to strike directly 
against Rodriguez. Citing a purported run on the national cur- 
rency, the guarani (see Glossary), Stroessner issued a resolution 
on January 27, 1989, closing all currency exchange houses in 
Paraguay. This action reportedly dealt a serious financial blow to 
Rodriguez, whose Cambios Guarani was one of Asuncion's larg- 
est currency traders. On January 30, 1989, Stroessner ordered the 
replacement of First Corps colonels Mauricio Bartolome Diaz 
Delmas and Regis Anibal Romero Espinola. Finally, on Febru- 
ary 2, 1989, Stroessner summoned Rodriguez and ordered him 
to give up his direct command of units and either accept the much 
less significant post of minister of national defense or retire. 
Rodriguez refused and several hours later called out his forces. 

As it turned out, Stroessner' s concerns were not unwarranted. 
Two weeks after the coup, Edgar L. Ynsfran — minister of interior 
from 1956 to 1966 and leader of the Movement for Colorado 
Integration (Movimiento de Integration Colorado) faction that was 
affiliated with the traditionalists — reported that coup preparations 
had been under way since late December 1988. According to 
Ynsfran, Rodriguez ordered Chaves, Argana, and Ynsfran to go 
into hiding immediately prior to the coup. In addition, Ynsfran 
claimed that on January 31, 1989, Rodriguez informed key per- 
sonnel in the First Corps that he would not accept the replacements 
of Colonels Diaz and Romero. Whether Stroessner was aware of 
any of this background remains unknown. 

In retrospect, Stroessner had overestimated the importance of 
the earlier command reassignments. The commanders of the Second 
Corps and Third Corps ignored Rodriguez's appeal for help. But 
commanders of two of the three major components of the Second 
Corps — the Second and Fourth Infantry Divisions — and one of the 
three major units of the Third Corps — the Sixth Infantry Division — 
pledged loyalty to Rodriguez. In addition, all of Rodriguez's First 
Corps units — the First Cavalry Division, the First Infantry Divi- 
sion, and the Third Infantry Division — rebelled against Stroessner. 
Within a week after the coup, Rodriguez promoted the commanders 
of the six rebellious divisions and purged the armed forces hierar- 
chy of Stroessner loyalists. 

Hours after Stroessner' s surrender, Rodriguez assumed the 
presidency. Rodriguez named a nine-member cabinet that had only 
one Stroessner holdover — the technocratic agriculture and livestock 
minister Hernando Bertoni Agron — and included General Machuca 
as interior minister, Argana as foreign minister, and Chaves as 



xxvi 



minister without portfolio. Rodriguez also appointed Chaves and 
Argana as president and vice president, respectively, of the Coun- 
cil of State, a body that is primarily advisory in nature but that 
has the power to issue decrees during the legislature's recess (see 
The Executive, ch. 4). The traditionalist resurgence was solidified 
by the selection of Chaves, Argana, and Ynsfran as president, first 
vice president, and second vice president, respectively, of the 
Colorado Party, and the removal of all militants from the National 
Committee. Chaves also dissolved all party local committees (sec- 
cionales) and called for new party elections by March 19, 1989. 

The new government went to great lengths to insist that its ac- 
tions were based on the Constitution of 1967. Because the previ- 
ous president had "resigned," Rodriguez's title actually was the 
constitutionally mandated one of provisional president. Rodriguez's 
call for a new presidential election on May 1 , 1989, was consistent 
with Article 179 of the Constitution, which requires such an elec- 
tion within ninety days upon the resignation of a president who 
has served fewer than two years of his term. (Stroessner had begun 
serving his eighth term as president in August 1988.) Again con- 
sistent with the Constitution, the winner of the May 1989 election 
would not serve a five-year term but only the unexpired portion 
of Stroessner' s term. Even Rodriguez's decision on February 6, 
1989, to dissolve the National Congress and to call for new elec- 
tions in May — an action designed to purge the militants — was given 
a constitutional twist. Argana informed the media that Article 182 
empowers the president to dissolve the legislature if the latter' s 
actions distorted the balance of the three branches of government 
and adversely affected compliance with the Constitution. Argana 
also announced that the Council of State would exercise its con- 
stitutional prerogative to issue decrees during the legislature's 
absence. 

In his first three weeks in office, Rodriguez contended that 
Paraguay had become a much more democratic and open coun- 
try. Indeed, much that occurred during this period would have been 
inconceivable under Stroessner' s rule. The government announced 
that all political parties except the Paraguayan Communist Party 
(Partido Comunista Paraguayo) could complete in the May 1 989 
elections. This was an extraordinary turn of events for the parties 
comprising the National Accord (Acuerdo Nacional) — the Authentic 
Radical Liberal Party (Partido Liberal Radical Autentico — PLRA), 
the Christian Democratic Party (Partido Democrata Cristiano), the 
Febrerista Revolutionary Party (Partido Revolucionario 
Febrerista — PRF), and the Colorado Popular Movement (Movi- 
miento Popular Colorado — Mopoco) — all of whose leaders had been 



xxvn 



repressed by Stroessner (see Toward the 1980s, ch. 1; Opposition 
Parties, ch. 4). Actually, Mopoco did not even have to plan for 
the elections because the traditionalists welcomed the movement 
back into the Colorado fold after thirty years in exile. The govern- 
ment not only authorized a National Accord rally on February 1 1 
but also permitted it to broadcast live on television. For the first 
time in their history, Colorados opened their party headquarters 
to the opposition and warmly received an address by PLRA lead- 
er Domingo Lamo. A few days after the coup, Humberto Rubin's 
Radio Nanduti was back on the air and the PRF's newspaper El 
Pueblo was publishing once again; the police had forced both to close 
in 1987. The new minister of education and worship stated that 
teachers need not join the Colorado Party as a condition of em- 
ployment. Even a rapprochement with the church was in evidence. 
Rodriguez and Rolon embraced at a special mass to honor those 
who had died in the coup. In its first public statement, the new 
Council of State invited Rolon to reoccupy the seat on the council 
that was reserved under the Constitution for the archbishop of Asun- 
cion. Rolon had boycotted council meetings for many years as a 
protest against Stroessner' s repression of the church. 

Despite these remarkable developments, some observers re- 
mained skeptical concerning the flowering of democracy in 
Paraguay. From 1954 to 1987, traditionalists served as major col- 
laborators of the Stronato. Positioned at all levels of government, 
traditionalists helped construct and institutionalize authoritarian- 
ism in Paraguay. For example, the Supreme Court rarely issued 
decisions at odds with the executive branch. Traditionalist legisla- 
tors routinely enacted laws that served Stroessner' s interests. 
After the coup, traditionalist leaders contended that Stroessner was 
a great president for thirty-three years but became surrounded by 
a group of "irresponsible, voracious politicians" in 1987. Such a 
contention appeared at odds with the structures of authoritarian- 
ism that had been in place by the mid-1950s. 

Observers also questioned the traditionalist pledge to weed out 
corruption in government. Following the coup, police arrested over 
thirty members of Stroessner' s government, including Abdo Bem- 
tez, Godoy, Aquino, Central Bank director Cesar Romeo Acosta, 
and Post Office director Modesto Esquivel. (Montanaro avoided 
arrest by fleeing to the Honduran embassy in Asuncion, and 
Jacquet had the good fortune of being out of the country at the 
time of the coup.) Interior Minister Machuca announced that those 
arrested would be tried for corruption. Smuggling and corruption, 
however, did not begin in 1987 but were endemic throughout the 
Stronato. 



xxvm 




Provisional President Andres Rodriguez meets with reporters 

during his first week in office. 
Courtesy Richard S. Sacks 



Less than a month after the coup, its real significance thus re- 
mained unclear. Certainly the new government was much more 
tolerant of opposition activities than was its predecessor. This toler- 
ance created opportunities by allowing the opposition to organize 
openly for the first time. But questions remained. Observers awaited 
future developments to determine if the coup was a breakthrough 
for democracy or the continuation of authoritarian rule. 



February 27, 1989 



Presidential and congressional elections dominated the 
Paraguayan political landscape in the months following comple- 
tion of research and writing of this book. Rodriguez and the Colo- 
rado Party's legislative candidates easily outdistanced their closest 
challengers, Laino and the PLRA. The opposition accused the 
government of numerous electoral irregularities, although it con- 
cluded that the Colorados would have won in any event. 

Attempting to extract concessions from Rodriguez, the Na- 
tional Accord initially announced that none of its members would 
participate in the elections unless the government extended the 



xxix 



registration period for sixty days; delayed the elections for four 
months; permitted parties to form coalitions; and determined 
congressional seats on the basis of proportional representation 
instead of the constitutional formula of awarding two-thirds to the 
party garnering the most votes (see The Legislature, ch. 4). The 
opposition regarded the last issue as particularly important. Many 
public opinion polls suggested that Rodriguez would capture 
approximately 70 percent of the vote, but that his congressional 
running mates would only receive slightly above 50 percent. The 
government, however, rejected all of the National Accord's 
demands except for the registration extension. After considerable 
debate, the PLRA — by far the most important component of the 
National Accord — decided to participate but adopted a complex 
formula that would allow it to withdraw prior to the May 1 elec- 
tion date if the government curtailed individual freedoms; to pre- 
vent its members from taking their seats in the new congress if fraud 
occurred on election day; or to remove its representatives from con- 
gress if that body did not adopt substantial electoral reforms. 

As anticipated, Rodriguez crushed Lamo in the presidential vote 
by a margin of 74 to 18 percent. But opposition leaders rejected 
the announcement of election officials that the Colorados had 
captured almost 73 percent of the congressional vote to only 20 
percent by the PLRA. As a result, the Colorados received forty- 
eight of the seventy-two seats in the Chamber of Deputies and 
twenty-four of the thirty-six seats in the Senate. The PLRA gained 
twenty-one and eleven seats, respectively. National Accord lead- 
ers charged that the government had tampered with the indelible 
ink designed to prevent multiple voting; had barred some opposi- 
tion members and voters from access to the polls; had removed 
opposition ballots from specific voting stations; and, on occasion, 
had positioned police or Colorado officials inside the voting booths. 
Despite these allegations, the opposition occupied its seats in the 
legislature, contending that to do otherwise would simply perpetuate 
its marginal role in the political system. Instead of rejecting out- 
right the congressional results, the opposition focused its demands 
for new elections on specific localities where voting irregularities 
were the most egregious. International election observers agreed 
that irregularities had occurred, although not at a level to have af- 
fected the eventual outcome. 

Although the elections captured the headlines, other important 
developments also occurred in the months following the February 
coup. The Rodriguez administration took several steps to restore 
confidence in the economy. First, the government abolished the 
multiple exchange-rate system that had severely overvalued the 



xxx 



guaram and allowed the currency to float to its true level (see 
Exchange-Rate Policy, ch. 3). Second, it announced plans to priva- 
tize highly inefficient state enterprises such as the National Cement 
Industry (Industria Nacional de Cemento — INC) and Paraguayan 
Steel (see Construction, ch. 3). Third, the government offered five- 
year tax holidays to new investors, including a total exemption from 
all financial taxes and a 95-percent exemption from taxes on income 
and dividends. Finally, the government made considerable progress 
toward restructuring its substantial foreign debt, which totaled 
slightly more than US$2 billion in June 1989 (see Balance of Pay- 
ments and Debt, ch. 3). In April Paraguay received a new twenty- 
year payment period and new conditions on the US$436 million 
owed to Brazil. Paraguay's Central Bank also reported in July that 
it would renegotiate an additional US$81 1 million in foreign debt. 

Considerable information also surfaced detailing the scope of cor- 
ruption during the Stronato. The former minister of public works 
and communications reported that from 1984 to January 1989, 
US$4 million in highway tolls and gasoline taxes were placed in 
one of Stroessner's personal bank accounts. In May two former 
senior INC officials were detained on charges of having partici- 
pated in the embezzlement of US$40 million in government funds. 
In an ironic twist, the Rodriguez administration announced that 
several former Stroessner officials would be prosecuted under Law 
209, "In Defense of Public Peace and Liberty of Person," for hav- 
ing promoted violence and hatred among Paraguayans. The law, 
enacted in 1970, had often been used by Stroessner to silence his 
political opponents (see Security and Political Offenses, ch. 5). 

In late 1989, the government indicated that it would accede to 
opposition demands and would convoke a constituent assembly prior 
to the 1993 elections. The opposition was determined to use such 
an assembly to limit the president to one term, to establish propor- 
tional representation in congress, and to design a more equitable 
electoral code. The outcome of that assembly would probably shed 
considerable light on the future course of democracy in Paraguay. 



October 5, 1989 Dennis M. Hanratty 



xxxi 



Chapter 1. Historical Setting 



Ruins of the Jesuit mission at Trinidad, Itapua Department 



PARAGUAY WAS ONE of the first countries in South America 
to achieve independence. Its history since the arrival of the Span- 
iards in 1537 evokes images of tremendous sacrifice and suffering 
amid lush surroundings. Because of its small population and 
poverty, however, its weight among the nations of the modern world 
is small. At the time of the Spanish conquest in the mid- 1500s, 
Paraguay was the second most important of the Spanish domin- 
ions in South America after Peru. But its preeminence as a colony 
did not last because it produced no gold or silver. In the long run, 
however, the country's lack of precious ores proved to be a bless- 
ing because it allowed Paraguay to escape the horrors of slavery 
that prevailed in the mines of Peru and Mexico. The Spanish con- 
quest and settlement proceeded more humanely in Paraguay than 
elsewhere in Spanish America. 

The country's basic characteristics were determined during the 
first few decades of European rule and reinforced under the Repub- 
lic of Paraguay after independence in 1811. The country has a 
largely egalitarian social structure. Its relatively homogeneous popu- 
lation of mestizos follows Spanish culture and religion but speaks 
the Indian language, Guaranf, at home. It also has a tradition of 
authoritarian rule and a concomitant lack of democratic institu- 
tions. Finally, Paraguay suffers from a paranoia-inducing isola- 
tion, originally because of its location in a wilderness populated 
by hostile Indians, and later because of its location between powerful 
neighbors — Brazil and Argentina. 

Partly because of its remoteness, Paraguay never had a very large 
European population. The colony's first governor urged Spanish 
men to take Indian wives to help them take their minds off return- 
ing to Spain, solve the problem of the scarcity of European women, 
and encourage peaceful relations between the tiny, vulnerable, 
European colony and its numerous Indian neighbors. Neither 
Spaniard nor Indian needed any prodding, however, as mixed 
unions predominated from the start. The Paraguayan republic's 
first dictator, Jose Gaspar Rodriguez de Francia, a criollo who dis- 
trusted his own criollo upper class, strengthened this pattern of mar- 
rying Indians. Francia forced the elite to marry Indian women, 
confiscated their lands, and broke their power. The disastrous 
1865-70 War of the Triple Alliance, which ended with the death 
of Paraguayan dictator Francisco Solano Lopez, further strength- 
ened the mestizo composition of society. At the end of the war, 



3 



Paraguay: A Country Study 

only 28,000 Spanish males were alive, down from 220,000. Span- 
ish women who wanted to marry had no choice but to accept mes- 
tizo suitors. 

Dictatorship is to Paraguay what constitutional democracy is to 
Scandinavia or Britain: it is the norm. Paraguay, a country where 
power has usually been centered on one man, has a history of domi- 
nation by authoritarian personalities. Paraguay's authoritarianism 
derives from Spanish attitudes, isolation amid hostile neighbors, 
and political inexperience and naivete among a population that has 
historically proved willing to abdicate its political rights and respon- 
sibilities. Nearly 300 years of Spanish rule rendered many Para- 
guayans poor, uneducated, unaware of the outside world, and 
lacking in experience with democracy. Furthermore, the people 
were nearly always under the threat of attack either from Indians 
or from raiders from Brazil. Indeed, its three neighbors — Brazil, 
Argentina, and Bolivia — each went to war with Paraguay at least 
once since 1810. 

Francia, named "dictator for life" in 1816 by a largely unedu- 
cated nation grateful for his diplomatic and administrative exper- 
tise, set the tone by founding a despotic police state that lasted until 
his death in 1840. His goal was to keep the country independent 
at all costs. He succeeded by founding the world's first system of 
state socialism, sealing off the country's borders, and pouring all 
available resources into defense. Paraguay was the only major coun- 
try in Spanish America to undergo a major social revolution as 
a direct result of independence. Father and son dictators Carlos 
Antonio Lopez and Francisco Solano Lopez succeeded Francia from 
1841 to 1862 and 1862 to 1870, respectively. After the 1865-70 
war, military officers began to replace civilians as politicians, but 
this fact represented no change in the country's pattern of dictatorial 
rule. 

Paraguay's stability diminished after 1904 when the Liberal Party 
(Partido Liberal — PL) ruled the nation. Paraguay had traded sta- 
ble dictatorships for unstable ones. Between 1904 and 1954, 
Paraguay had thirty-one presidents, most of whom were removed 
from office by force. During the particularly unstable period 
between 1910 and 1912, seven presidents entered and left office. 
As political instability grew, so did the importance of the military 
in politics. Still, military rule did not predominate. Only four of 
eight presidents who finished their terms were military men. 

A 1954 coup ushered in the Stronato, the period of rule of Alfredo 
Stroessner Mattiauda, who remained in power in late 1988. Few 
imagined in the 1950s that Stroessner' s term of office would become 
the longest in Paraguay's history. Stroessner effectively combined 



4 



Historical Setting 



political skill, hard work, and repression to gain complete control 
of the National Republican Association-Colorado Party (Asocia- 
cion Nacional Republicana-Partido Colorado) and eliminate regime 
opponents. By the early 1960s, all other political parties were either 
legitimating the political system by participating in fraudulent elec- 
tions or were effectively isolated. 

Although Stroessner clearly represented continuity with 
Paraguay's authoritarian past, he also dragged the country out of 
its isolation. A mammoth hydroelectric project at Itaipu on the Rio 
Parana shattered Paraguay's seclusion forever by injecting billions 
of dollars into the economy. The project put money into the pockets 
of previously penniless campesinos and contributed to the emer- 
gence of the middle class. Many observers believed that economic 
growth unleashed demands for democratic reform in Paraguay, 
and, as the 1980s began, the Stroessner regime seemed increas- 
ingly under attack from its critics. 

Discovery and Settlement 
Early Explorers and Conquistadors 

The recorded history of Paraguay began indirectly in 1516 with 
the failed expedition of Juan Diaz de Solfs to the Rio de la Plata 
Estuary, which divides Argentina and Uruguay. After Solis's death 
at the hands of Indians, the expedition renamed the estuary Rio 
de Solis and sailed back to Spain. On the home voyage, one of 
the vessels was wrecked off Santa Catarina Island near the Brazilian 
coast. Among the survivors was Aleixo Garcia, a Portuguese adven- 
turer who had acquired a working knowledge of Guarani. Garcia 
was intrigued by reports of "the White King" who, it was said, 
lived far to the west and governed cities of incomparable wealth 
and splendor. For nearly eight years, Garcia patiently mustered 
men and supplies for a trip to the interior and finally left Santa 
Catarina with several European companions to raid the domin- 
ions of "El Rey Blanco." 

Marching westward, Garcia' s group discovered Iguazu Falls, 
crossed the Rio Parana, and arrived at the site of Asuncion thir- 
teen years before it was founded. There the group gathered a small 
army of 2,000 Guarani warriors to assist the invasion and set out 
boldly across the Chaco, a harsh semidesert. In the Chaco, they 
faced drought, floods, and cannibal Indian tribes. Garcia became 
the first European to cross the Chaco and penetrated the outer 
defenses of the Inca Empire to the foothills of the Andes Moun- 
tains in present-day Bolivia, eight years in advance of Francisco 
Pizarro. The Garcia entourage engaged in plundering and amassed 



5 



Paraguay: A Country Study 

a considerable horde of silver. Only fierce attacks by the reigning 
Inca, Huayna Capac, convinced Garcia to withdraw. Indian al- 
lies later murdered Garcia and the other Europeans, but news of 
the raid on the Incas reached the Spanish explorers on the coast 
and attracted Sebastian Cabot to the Rio Paraguay two years later. 

The son of the Genoese explorer John Cabot (who had led the 
first European expedition to North America), Sebastian Cabot was 
sailing to the Orient in 1526 when he heard of Garcia's exploits. 
Cabot thought the Rio de Soils might provide easier passage to 
the Pacific and the Orient than the stormy Straits of Magellan where 
he was bound, and, eager to win the riches of Peru, he became 
the first European to explore that estuary. 

Leaving a small force on the northern shore of the broad estu- 
ary, Cabot proceeded up the Rio Parana uneventfully for about 
160 kilometers and founded a settlement he named Sancti Spiritu. 
He continued upstream for another 800 kilometers, past the junc- 
tion with the Rio Paraguay. When navigation became difficult, 
Cabot turned back, but only after obtaining some silver objects 
that the Indians said came from a land far to the west. Cabot 
retraced his route on the Rio Parana and entered the Rio Paraguay. 
Sailing upriver, Cabot and his men traded freely with the Guarani 
tribes until a strong force of Agaces Indians attacked them. About 
forty kilometers below the site of Asuncion, Cabot encountered a 
tribe of Guarani in possession of silver objects, perhaps some of 
the spoils of Garcia's treasure. Hoping he had found the route to 
the riches of Peru, Cabot renamed the river Rio de la Plata, 
although today the name applies only to the estuary as far inland 
as the city of Buenos Aires. 

Cabot returned to Spain in 1530 and informed Emperor Charles 
V (1519-56) about his discoveries. Charles gave permission to Don 
Pedro de Mendoza to mount an expedition to the Plata basin. The 
emperor also named Mendoza governor of Rio de la Plata and 
granted him the right to name his successor. But Mendoza, a sickly, 
disturbed man, proved to be utterly unsuitable as a leader, and 
his cruelty nearly undermined the expedition. Choosing what was 
possibly the continent's worst site for the first Spanish settlement 
in South America, in February 1536 Mendoza built a fort at a poor 
anchorage on the southern side of the Plata estuary on an inhospita- 
ble, windswept, dead-level plain where not a tree or shrub grew. 
Dusty in the dry season, a quagmire in the rains, the place was 
inhabited by the fierce Querandf tribe that resented having the 
Spaniards as neighbors. The new outpost was named Buenos Aires 
(Nuestra Senora del Buen Ayre), although it was hardly a place 
one would visit for the "good air." 



6 



Historical Setting 



Mendoza soon provoked the Querandis into declaring war on 
the Europeans. Thousands of them and their Timbu and Charrua 
allies besieged the miserable company of half-starved soldiers and 
adventurers. The Spaniards were soon reduced to eating rats and 
the flesh of their deceased comrades. 

Meanwhile, Juan de Ayolas, who was Mendoza's second-in- 
command and who had been sent upstream to reconnoiter, returned 
with a welcome load of corn and news that Cabot's fort at Sancti 
Spiritu had been abandoned. Mendoza promptly dispatched Ayo- 
las to explore a possible route to Peru. Accompanied by Domingo 
Martinez de Irala, Ayolas again sailed upstream until he reached 
a small bay on the Rio Paraguay, which he named Candelaria, 
the present-day Fuerte Olimpo. Appointing Irala his lieutenant, 
Ayolas ventured into the Chaco and was never seen again. 

After Mendoza returned unexpectedly to Spain, two other mem- 
bers of the expedition — Juan de Salazar de Espinosa and Gonzalo 
de Mendoza — explored the Rio Paraguay and met up with Irala. 
Leaving him after a short time, Salazar and Gonzalo de Mendoza 
descended the river, stopping at a fine anchorage. They commenced 
building a fort on August 15, 1537, the date of the Feast of the 
Assumption, and called it Asuncion (Nuestra Senora Santa Maria 
de la Asuncion). Within 20 years, the settlement had a population 
of about 1,500. Transcontinental shipments of silver passed through 
Asuncion on their way from Peru to Europe. Asuncion subsequently 
became the nucleus of a Spanish province that encompassed a large 
portion of southern South America — so large, in fact, that it was 
dubbed "La Provincia Gigante de Indias." Asuncion also was the 
base from which this part of South America was colonized. 
Spaniards moved northwestward across the Chaco to found Santa 
Cruz in Bolivia; eastward to occupy the rest of present-day 
Paraguay; and southward along the river to refound Buenos Aires, 
which its defenders had abandoned in 1541 to move to Asuncion. 

The Young Colony 

Uncertainties over the departure of Pedro de Mendoza led 
Charles V to promulgate a cedula (decree) that was unique in colonial 
Latin America. The cedula granted colonists the right to elect the 
governor of Rio de la Plata Province either if Mendoza had failed 
to designate a successor or if a successor had died. Two years later, 
the colonists elected Irala as governor. His domain included all of 
present-day Paraguay, Argentina, Uruguay, most of Chile, and 
large parts of Brazil and Bolivia. In 1542 the province became part 
of the newly established Viceroyalty of Peru, with its seat in Lima. 



7 





8 



Iguazu Falls at Paraguay's border with Argentina and Brazil. 
In 1630 the Jesuits abandoned their reducciones north and east 
of the falls after attacks by slave traders. 
Courtesy Inter-American Development Bank. 



9 



Paraguay: A Country Study 

Beginning in 1559, the Audiencia of Charcas (present-day Sucre, 
Bolivia) controlled the province's legal affairs. 

Irala's rule set the pattern for Paraguay's internal affairs until 
independence. In addition to the Spaniards, Asuncion included 
people — mostly men — from present-day France, Italy, Germany, 
England, and Portugal. This community of about 350 chose wives 
and concubines from among the Guaranf women. Irala had several 
Guarani concubines, and he encouraged his men to marry Indian 
women and give up thoughts of returning to Spain. Paraguay soon 
became a colony of mestizos, and, prompted by Irala's example, 
the Europeans raised their offspring as Spaniards. Nevertheless, 
continued arrivals of Europeans allowed for the development of 
a criollo elite. 

The Guaranf, the Cario, Tape, Itatine, Guarajo, Tupf, and 
related subgroups, were generous people who inhabited an immense 
area stretching from the Guyana Highlands in Brazil to the Rio 
Uruguay. Because the Guarani were surrounded by other hostile 
tribes, however, they were frequently at war. They believed that 
permanent wives were inappropriate for warriors, so their marital 
relations were loose. Some tribes practiced polygamy with the aim 
of increasing the number of offspring. Chiefs often had twenty or 
thirty concubines whom they shared freely with visitors, yet they 
treated their wives well. They often punished adulterers with death. 
Like the area's other tribes, the Guarani were cannibals. But they 
usually ate only their most valiant foes captured in battle in the 
hope that they would gain the bravery and power of their victims. 

In contrast with the hospitable Guarani, the Chaco tribes, such 
as the Payagua (whence the name Paraguay), Guaycuru, M'baya, 
Abipon, Mocobf, and Chiri guano, were implacable enemies of the 
whites. Travelers in the Chaco reported that the Indians there were 
capable of running with incredible bursts of speed, lassoing and 
mounting wild horses in full gallop, and catching deer bare-handed. 
Accordingly, the Guarani accepted the arrival of the Spaniards and 
looked to them for protection against fiercer neighboring tribes. 
The Guaranf also hoped the Spaniards would lead them once more 
against the Incas. 

The peace that had prevailed under Irala broke down in 1542 
when Charles V appointed Alvar Nunez Cabeza de Vaca — one 
of the most renowned conquistadors of his age — as governor of the 
province. Cabeza de Vaca arrived in Asuncion after having lived 
for ten years among the Indians of Florida. Almost immediately, 
however, the Rfo de la Plata Province — now consisting of 800 
Europeans — split into 2 warring factions. Cabeza de Vaca's ene- 
mies accused him of cronyism and opposed his efforts to protect 



10 



Historical Setting 



the interests of the Indians. Cabeza de Vaca tried to placate his 
enemies by launching an expedition into the Chaco in search of 
a route to Peru. This move disrupted the Chaco tribes so much 
that they unleashed a two-year war against the colony, thus threat- 
ening its existence. In the colony's first of many revolts against 
the crown, the settlers seized Cabeza de Vaca, sent him back to 
Spain in irons, and returned the governorship to Irala. 

Irala ruled without further interruption until his death in 1556. 
In many ways, his governorship was one of the most humane in 
the Spanish New World at that time, and it marked the transition 
among the settlers from conquerors to landowners. Irala kept up 
good relations with the Guaram, pacified hostile Indians, made 
further explorations of the Chaco, and began trade relations with 
Peru. This Basque soldier of fortune saw the beginnings of a tex- 
tile industry and the introduction of cattle, which flourished in the 
country's fertile hills and meadows. The arrival of Father Pedro 
Fernandez de la Torre on April 2, 1556, as the first bishop of Asun- 
cion marked the establishment of the Roman Catholic Church in 
Paraguay. Irala presided over the construction of a cathedral, two 
churches, three convents, and two schools. 

Irala eventually antagonized the Indians, however. In the last 
years of his life, he yielded to pressure from settlers and established 
the encomienda. Under this system, settlers received estates of land 
along with the right to the labor and produce of the Indians living 
on those estates. Although encomenderos were expected to care for 
the spiritual and material needs of the Indians, the system quickly 
degenerated into virtual slavery. In Paraguay 20,000 Indians were 
divided among 320 encomenderos. This action helped spark a full- 
scale Indian revolt in 1560 and 1561. Political instability began 
troubling the colony and revolts became commonplace. Also, given 
his limited resources and manpower, Irala could do little to check 
the raids of Portuguese marauders along his eastern borders. Still, 
Irala left Paraguay prosperous and relatively at peace. Although 
he had found no El Dorado to equal those of Hernan Cortes in 
Mexico and Pizarro in Peru, he was loved by his people, who 
lamented his passing. 

The Sword of the Word 

During the next 200 years, the Roman Catholic Church — 
especially the ascetic, single-minded members of the Society of Jesus 
(the Jesuits) — had much more influence on the colony's social and 
economic life than the feckless governors who succeeded Irala. Three 
Jesuits — an Irishman, a Catalan, and a Portuguese — arrived 
in 1588 from Brazil. They promptly moved from Asuncion to 



11 



Paraguay: A Country Study 

proselytize among the Indians along the upper Rio Parana. Because 
they already believed in an impersonal, supreme being, the Guaram 
proved to be good pupils of the Jesuits. 

In 1610 Philip III (1598-1621) proclaimed that only the "sword 
of the word" should be used to subdue the Paraguayan Indians, 
thus making them happy subjects. The church granted extensive 
powers to Jesuit Father Diego de Torres to implement a new plan, 
with royal blessings, that foresaw an end to the encomienda system. 
This plan angered the settlers, whose lifestyle depended on a con- 
tinuing supply of Indian labor and concubines. The settlers' 
resistance helped convince the Jesuits to move their base of opera- 
tions farther afield to the province of Guayra in the distant north- 
east. After unsuccessful attempts to "civilize" the recalcitrant 
Guaycuru, the Jesuits eventually put all their efforts into working 
with the Guaram. Organizing the Guaram in reducciones (reduc- 
tions or townships), the hard-working fathers began a system that 
would last more than a century. In one of history's greatest experi- 
ments in communal living, the Jesuits had soon organized about 
100,000 Guaram in about 20 reducciones, and they dreamed of a 
Jesuit empire that would stretch from the Paraguay-Parana con- 
fluence to the coast and back to the Parana headwaters. 

The new Jesuit reducciones were unfortunately within striking dis- 
tance of the mamelucos, the slave-raiding, mixed-race descendants 
of Portuguese and Dutch adventurers. The mamelucos were based 
in Sao Paulo, Brazil, which had become a haven for freebooters 
and pirates by the early 1600s because it was beyond the control 
of the Portuguese colonial governor. The mamelucos survived mostly 
by capturing Indians and selling them as slaves to Brazilian planters. 
Having depleted the Indian population near Sao Paulo, they ven- 
tured farther afield until they discovered the richly populated reduc- 
ciones. The Spanish authorities chose not to defend the settlements. 

Spain and Portugal were united from 1580 to 1640. Although 
their colonial subjects were at war, the governor of Rio de la Plata 
Province had little incentive to send scarce troops and supplies 
against an enemy who was nominally of the same nationality. In 
addition, the Jesuits were not popular in Asuncion, where the set- 
tlers had the governor's ear. The Jesuits and their thousands of 
neophytes thus had little means to protect themselves from the 
depredations of the "Paulistas," as the mamelucos also were called 
(because they came from Sao Paulo). In one such raid in 1629, 
about 3,000 Paulistas destroyed the reducciones in their path by burn- 
ing churches, killing old people and infants (who were worthless 
as slaves), and carrying off to the coast entire human populations, 



12 



Historical Setting 



as well as cattle. Their first raids on the reducciones netted them at 
least 15,000 captives. 

Faced with the awesome challenge of a virtual holocaust that was 
frightening away their neophytes and encouraging them to revert 
to paganism, the Jesuits took drastic measures. Under the leader- 
ship of Father Antonio Ruiz de Montoya, as many as 30,000 
Indians (2,500 families) retreated by canoe and traveled hundreds 
of kilometers south to another large concentration of Jesuit reduc- 
ciones near the lower Parana . About 12,000 people survived. But 
the retreat failed to deter the Paulistas, who continued to raid and 
carry off slaves until even the reducciones far to the south faced 
extinction. The Paulista threat ended only after 1639, when the 
viceroy in Peru agreed to allow Indians to bear arms. Well-trained 
and highly motivated Indian units, serving under Jesuit officers, 
bloodied the raiders and drove them off. 

Victory over the Paulistas set the stage for the golden age of the 
Jesuits in Paraguay. The Guaram were unaccustomed to the dis- 
cipline and the sedentary life prevalent in the reducciones, but adapted 
to it readily because it offered them higher living standards, pro- 
tection from settlers, and physical security. By 1700 the Jesuits could 
again count 100,000 neophytes in about 30 reducciones. The reduc- 
ciones exported goods, including cotton and linen cloth, hides, 
tobacco, lumber, and above all, yerba mate, a plant used to produce 
a bitter tea that is popular in Paraguay and Argentina. The Jesuits 
also raised food crops and taught arts and crafts. In addition, they 
were able to render considerable service to the crown by supply- 
ing Indian armies for use against attacks by the Portuguese, English, 
and French. At the time of the expulsion of the Jesuits from the 
Spanish Empire in 1767, the reducciones were enormously wealthy 
and comprised more than 21 ,000 families. Their vast herds included 
approximately 725,000 head of cattle, 47,000 oxen, 99,000 horses, 
230,000 sheep, 14,000 mules, and 8,000 donkeys. 

Because of their success, the 14,000 Jesuits who had volunteered 
over the years to serve in Paraguay gained many enemies. They 
were a continual goad to the settlers, who viewed them with envy 
and resentment and spread rumors of hidden gold mines and the 
threat to the crown from an independent Jesuit republic. To the 
crown, the reducciones seemed like an increasingly ripe plum, ready 
for picking. 

The reducciones fell prey to changing times. During the 1 720s and 
1730s, Paraguayan settlers rebelled against Jesuit privileges and 
the government that protected them. Although this revolt failed, 
it was one of the earliest and most serious risings against Spanish 
authority in the New World and caused the crown to question its 



13 



Paraguay: A Country Study 

continued support for the Jesuits. The Jesuit-inspired War of the 
Seven Reductions (1750-61), which was fought to prevent the trans- 
fer to Portugal of seven missions south of the Rio Uruguay, 
increased sentiment in Madrid for suppressing this ' 'empire within 
an empire." 

In a move to gain the reducciones' wealth to help finance a planned 
reform of Spanish administration in the New World, the Spanish 
king, Charles III (1759-88), expelled the Jesuits in 1767. Within 
a few decades of the expulsion, most of what the Jesuits had 
accomplished was lost. The missions lost their valuables, became 
mismanaged, and were abandoned by the Guarani. The Jesuits 
vanished almost without a trace. Today, a few weed-choked ruins 
are all that remain of this 160-year period in Paraguayan history. 

Independence and Dictatorship 
Struggle with the Portenos 

The Viceroyalty of Peru and the Audiencia of Charcas had nomi- 
nal authority over Paraguay, while Madrid largely neglected the 
colony. Madrid preferred to avoid the intricacies and the expense 
of governing and defending a remote colony that had shown early 
promise but ultimately proved to have dubious value. Thus, gover- 
nors of Paraguay had no royal troops at their disposal and were 
instead dependent on a militia composed of colonists. Paraguayans 
took advantage of this situation and claimed that the 1537 cedula 
gave them the right to choose and depose their governors. The 
colony, and in particular the Asuncion municipal council (cabildo), 
earned the reputation of being in continual revolt against the crown. 

Tensions between royal authorities and settlers came to a head 
in 1720 over the status of the Jesuits, whose efforts to organize the 
Indians had denied the settlers easy access to Indian labor. A full- 
scale rebellion, known as the Comunero Revolt, broke out when 
the viceroy in Lima reinstated a pro-Jesuit governor whom the set- 
tlers had deposed. The revolt was in many ways a rehearsal for 
the radical events that began with independence in 181 1 . The most 
prosperous families of Asuncion (whose yerba mate and tobacco 
plantations competed directly with the Jesuits) initially led this 
revolt. But as the movement attracted support from poor farmers 
in the interior, the rich abandoned it and soon asked the royal 
authorities to restore order. In response, subsistence farmers began 
to seize the estates of the upper class and drive them out of the 
countryside. A radical army nearly captured Asuncion and was 
repulsed, ironically, only with the help of Indian troops from the 
Jesuit reducciones. 



14 



Historical Setting 



The revolt was symptomatic of decline. Since the refounding of 
Buenos Aires in 1580, the steady deterioration in the importance 
of Asuncion contributed to growing political instability within the 
province. In 1617 the Rio de la Plata Province was divided into 
two smaller provinces: Paraguay, with Asuncion as its capital, and 
Rio de la Plata, with headquarters in Buenos Aires. With this action, 
Asuncion lost control of the Rio de la Plata Estuary and became 
dependent on Buenos Aires for maritime shipping. In 1776 the 
crown created the Viceroyalty of Rio de la Plata; Paraguay, which 
had been subordinate to Lima, now became an outpost of Buenos 
Aires (see fig. 2). Located at the periphery of the empire, Paraguay 
served as a buffer state. The Portuguese blocked Paraguayan 
territorial expansion in the north, the Jesuits — until their 
expulsion — blocked it in the south, and the Indians blocked it in 
the west. Paraguayans were forced into the colonial militia to serve 
extended tours of duty away from their homes, contributing to a 
severe labor shortage. 

Because Paraguay was located far from colonial centers, it had 
little control over important decisions that affected its economy. 
Spain appropriated much of Paraguay's wealth through burden- 
some taxes and regulations. Yerba mate, for instance, was priced 
practically out of the regional market. At the same time, Spain was 
using most of its wealth from the New World to import manufac- 
tured goods from the more industrialized countries of Europe, nota- 
bly Britain. Spanish merchants borrowed from British merchants 
to finance their purchases; merchants in Buenos Aires borrowed 
from Spain; those in Asuncion borrowed from the portenos (as resi- 
dents of Buenos Aires were called); and Paraguayan peones (land- 
less peasants in debt to landlords) bought goods on credit. The result 
was dire poverty in Paraguay and an increasingly impoverished 
empire. 

The French Revolution, the rise of Napoleon Bonaparte, and 
the subsequent war in Europe inevitably weakened Spain's ability 
to maintain contact with and defend and control its colonies. When 
British troops attempted to seize Buenos Aires in 1806, the attack 
was repulsed by the city's residents, not by Spain. Napoleon's 
invasion of Spain in 1808, the capture of the Spanish king, Ferdi- 
nand VII (ruled 1808, 1814-33), and Napoleon's attempt to put 
his brother, Joseph Bonaparte, on the Spanish throne, severed the 
major remaining links between metropolis and satellite. Joseph had 
no constituency in Spanish America. Without a king, the entire 
colonial system lost its legitimacy, and the colonists revolted. Buoyed 
by their recent victory over British troops, the Buenos Aires cabildo 



15 



Paraguay: A Country Study 




%$o<kta<Biau Ocean 



■ 



Administrative boundary 

City 

River 

Spanish territory 



J Portuguese territory 



fcs^^^i Possession disputed by 
Britain and Spain 



400 

, I 



800 Kilometers 



Source: Based on information from A. Curtis Wilgus, Historical Atlas of Latin America: Polit- 
ical, Geographical, Economic, Cultural, New York, 1967, 112. 



Figure 2. Southern Viceroy alties, 1776 



deposed the Spanish viceroy on May 25, 1810, vowing to rule in 
the name of Ferdinand VII. 

The porteno action had unforseen consequences for the histories 
of Argentina and Paraguay. News of the events in Buenos Aires 
at first stunned the citizens of Asuncion, who had largely supported 
the royalist position. But no matter how grave the offenses of the 
ancien regime may have been, they were far less rankling to the 
proud Paraguayans than the indignity of being told to take orders 
from the portenos. After all, Paraguay had been a thriving, established 



16 



Historical Setting 



colony when Buenos Aires was only a squalid settlement on the 
edge of the empty pampas. 

The portenos bungled their effort to extend control over Paraguay 
by choosing Jose Espmola y Pefia as their spokesman in Asuncion. 
Espmola was " perhaps the most hated Paraguayan of his era, " 
in the words of historian John Hoyt Williams. Espmola' s recep- 
tion in Asuncion was less than cordial, partly because he was closely 
linked to rapacious policies of the ex-governor, Lazaro de Rivera, 
who had arbitrarily shot hundreds of his citizens until he was forced 
from office in 1805. Barely escaping a term of exile in Paraguay's 
far north, Espmola fled back to Buenos Aires and lied about the 
extent of porteno support in Paraguay, causing the Buenos Aires 
cabildo to make an equally disastrous move. In a bid to settle the 
issue by force, the cabildo sent 1 , 100 troops under General Manuel 
Belgrano to subdue Asuncion. Paraguayan troops soundly thrashed 
the portenos at Paraguan and Tacuan. Officers from both armies, 
however, fraternized openly during the campaign. From these con- 
tacts the Paraguayans came to realize that Spanish dominance in 
South America was coming to an end, and that they, and not the 
Spaniards, held the real power. 

If the Espmola and Belgrano affairs served to whet nationalist 
passions in Paraguay, the Paraguayan royalists' ill-conceived actions 
that followed inflamed them. Believing that the Paraguayan officers 
who had whipped the portenos posed a direct threat to his rule, Gover- 
nor Bernardo de Velasco dispersed and disarmed the forces under 
his command and sent most of the soldiers home without paying 
them for their eight months of service. Velasco previously had lost 
face when he fled the battlefield at Paraguan, thinking Belgrano 
would win. Discontent spread, and the last straw was the request 
by the Asuncion cabildo for Portuguese military support against Bel- 
grano 's forces, who were encamped just over the border in present- 
day Argentina. Far from bolstering the cabildo 's position, this move 
instantly ignited an uprising and the overthrow of Spanish authority 
in Paraguay on May 14 and 15, 1811. Independence was declared 
on May 17. 

The Rise of Jose Gaspar Rodriguez de Francia 

Jose Gaspar Rodriguez de Francia was one of the greatest figures 
in Paraguayan history. Ruling from 1814 until his death in 1840, 
Francia succeeded almost single-handedly in building a strong, 
prosperous, secure, and independent nation at a time when 
Paraguay's continued existence as a distinct country seemed 
unlikely. He left Paraguay at peace, with government coffers full 
and many infant industries flourishing. Frugal, honest, competent, 



17 



Paraguay: A Country Study 

and diligent, Francia was tremendously popular with the lower 
classes. But despite his popularity, Francia trampled on human 
rights, imposing an authoritarian police state based on espionage 
and coercion. Under Francia, Paraguay underwent a social 
upheaval that destroyed the old elites. 

Paraguay at independence was a relatively undeveloped area. 
Most residents of Asuncion and virtually all rural settlers were 
illiterate. Urban elites did have access to private schools and tutor- 
ing. University education was, however, restricted to the few who 
could afford studies at the University of Cordoba, in present-day 
Argentina. Practically no one had any experience in government, 
finance, or administration. The settlers treated the Indians as lit- 
tle better than slaves, and the paternalistic clergy treated them like 
children. The country was surrounded by hostile neighbbrs, 
including the warlike Chaco tribes. Strong measures were needed 
to save the country from disintegration. 

Francia, born in 1766, spent his student days studying theology 
at the College of Monserrat at the University of Cordoba. Although 
he was dogged by suggestions that his father — a Brazilian tobacco 
expert — was a mulatto, Francia was awarded a coveted chair of 
theology at the Seminary of San Carlos in Asuncion in 1790. His 
radical views made his position as a teacher there untenable, and 
he soon gave up theology to study law. A devotee of the Enlight- 
enment and the French Revolution, a keen reader of Voltaire, Jean- 
Jacques Rousseau, and the French Encyclopedists, Francia had the 
largest library in Asuncion. His interest in astronomy, combined 
with his knowledge of French and other subjects considered arcane 
in Asuncion, caused some superstitious Paraguayans to regard him 
as a wizard capable of predicting the future. As a lawyer, he became 
a social activist and defended the less fortunate against the affluent. 
He demonstrated an early interest in politics and attained with 
difficulty the position of alcalde del primer voto, or head of the Asun- 
cion cabildo. by 1809. the highest position he could aspire to as a 
criollo. 

After the cuartelazo (coup d'etat) of May 14-15, which brought 
independence, Francia became a member of the ruling junta. 
Although real power rested with the military, Francia' s many talents 
attracted support from the nation's farmers. Probably the only man 
in Paraguay with diplomatic, financial, and administrative skills, 
Francia built his power base on his organizational abilities and his 
forceful personality. By outwitting portetio diplomats in the negotia- 
tions that produced the Treaty of October 11, 1811 (in which 
Argentina implicitly recognized Paraguayan independence in return 



18 



Historical Setting 



for vague promises of a military alliance), Francia proved that he 
possessed skills crucial to the future of the country. 

Francia consolidated his power by convincing the insecure 
Paraguayan elite that he was indispensable. But at the end of 181 1 , 
dissatisfied with the political role that military officers were begin- 
ning to play, he resigned from the junta. From his retirement in 
his modest chacra (cottage or hut) at Ibaray, near Asuncion, he told 
countless ordinary citizens who came to visit him that their revo- 
lution had been betrayed, that the change in government had only 
traded a Spanish-born elite for a criollo one, and that the present 
government was incompetent and mismanaged. In fact, the coun- 
try was rapidly heading for a crisis. Not only were the Portuguese 
threatening to overrun the northern frontiers, but Argentina had 
also practically closed the Rio de la Plata to Paraguayan commerce 
by levying taxes and seizing ships. To make matters worse, the 
porteno government agitated for Paraguayan military assistance 
against the Spanish in Uruguay and, disregarding the Treaty of 
October 1 1 , for unification of Paraguay with Argentina. The porteno 
government also informed the junta it wanted to reopen talks. 

When the junta learned that a porteno diplomat was on his way 
to Asuncion, it panicked because it realized it was not competent 
to negotiate without Francia. In November 1812, the junta mem- 
bers invited Francia to take charge of foreign policy, an offer Francia 
accepted. In return, the junta agreed to place one-half of the army 
and half the available munitions under Francia' s command. In the 
absence of anyone equal to him on the junta, Francia now con- 
trolled the government. When the Argentine envoy, Nicolas de Her- 
rera, arrived in May 1813, he learned to his dismay that all decisions 
had to await the meeting of a Paraguayan congress in late Sep- 
tember. Meanwhile, Paraguay again declared itself independent 
of Argentina and expelled two junta members known to be sym- 
pathetic to union with Argentina. Under virtual house arrest, Her- 
rera had little scope to build support for unification, even though 
he resorted to bribery. 

The congress, which met on September 30, 1813, was certainly 
the first of its kind in Latin America. There were more than 1 , 100 
delegates chosen by universal male suffrage, and many of these 
delegates represented the poor, rural Paraguayan majority. Iron- 
ically, the decisions of this democratically elected body would 
set the stage for a long dictatorship. Herrera was neither allowed 
to attend the sessions, nor to present his declaration; instead the 
congress gave overwhelming support to Francia' s anti-imperialist 
foreign policy. The delegates rejected a proposal for Paraguayan 
attendance at a constitutional congress at Buenos Aires and 



19 



Paraguay: A Country Study 

established a Paraguayan republic — the first in Spanish America — 
with Francia as first consul. Francia was supposed to trade places 
every four months with the second consul, Fulgencio Yegros, but 
Francia' s consulship marked the beginning of his direct rule because 
Yegros was little more than a figurehead. Yegros, a man without 
political ambitions, represented the nationalist criollo military elite, 
but Francia was the more powerful because he derived his strength 
from the nationalist masses. 

El Supremo Dictador 

Francia, described by a historian as "the frail man in the black 
frock coat," admired and emulated the most radical elements of 
the French Revolution. Although he has been compared to the 
Jacobin leader Maximilien de Robespierre (1758-94), Francia's 
policies and ideals perhaps most closely resembled those of Francois- 
Noel Babeuf, a French Utopian who wanted to abolish private 
property and communalize land as a prelude to founding a "repub- 
lic of equals." Francia detested the political culture of the old regime 
and considered himself a "revolutionary." 

In essence, the government of Caraf Guazu ("Great Sefior," 
as Francia was called by the poor) was a dictatorship that destroyed 
the power of the elite and advanced the interests of common 
Paraguayans. A system of internal espionage destroyed free speech. 
People were arrested without charge and disappeared without trial. 
Torture in the so-called Chamber of Truth was applied to those 
suspected of plotting to overthrow Francia. Francia sent political 
prisoners — numbering approximately 400 in any given year — to 
a detention camp where they were shackled in dungeons and denied 
medical care and even the use of sanitary facilities. In an indirect 
act of revenge against people who had discriminated against him 
because of his supposed "impure blood," Francia forbade Euro- 
peans from marrying other Europeans, thus forcing the elite to 
choose spouses from among the local population. Francia tightly 
sealed Paraguay's borders to the outside world and executed any- 
one who attempted to leave the country. Foreigners who managed 
to enter Paraguay had to remain there for the rest of their lives. 
Paraguayan commerce declined practically to nil. The decline 
ruined exporters of yerba mate and tobacco. These measures fell 
most harshly on the members of the former ruling class of Spanish 
or Spanish-descended church officials, military officers, merchants, 
and hacendados. 

In 1820, four years after a Paraguayan congress had named 
Francia dictator for life with the title El Supremo Dictador 
(supreme dictator), Francia's security system uncovered and 



20 



Historical Setting 



quickly crushed a plot by the elite to assassinate El Supremo. Francia 
arrested almost 200 prominent Paraguayans and eventually 
executed most of them. In 1821 Francia struck again, summoning 
all of Paraguay's 300 or so peninsulares (people born in Spain) to 
Asuncion's main square, where he accused them of treason, had 
them arrested, and led them off to jail for 18 months. Francia 
released them only after they agreed to pay an enormous collec- 
tive indemnity of 150,000 pesos (about 75 percent of the annual 
state budget), an amount so large that it broke their predominance 
in the Paraguayan economy. 

One of Francia' s special targets was the Roman Catholic Church. 
The church had provided an essential ideological underpinning to 
Spanish rule by spreading the doctrine of the "divine right of kings" 
and inculcating the Indian masses with a resigned fatalism about 
their social status and economic prospects. Francia banned reli- 
gious orders, closed the country's only seminary, "secularized" 
monks and priests by forcing them to swear loyalty to the state, 
abolished the fuero eclesidstico (the privilege of clerical immunity from 
civil courts), confiscated church property, and subordinated church 
finances to state control. 

The common people of Paraguay benefited from the repression 
of the traditional elites and the expansion of the state. The state 
took land from the elite and the church and leased it to the poor. 
About 875 families received homesteads from the lands of the former 
seminary. The various fines and confiscations levied on the criol- 
los helped reduce taxes for everyone else. As a result, Francia' s 
attacks on the elite and his state socialist policies provoked little 
popular resistance. The fines, expropriations, and confiscations of 
foreign-held property meant that the state quickly became the 
nation's largest landowner, eventually operating forty-five animal- 
breeding farms. Run by army personnel, the farms were so suc- 
cessful that the surplus animals were given away to the peasants. 

In contrast to other states in the region, Paraguay was efficiently 
and honestly administered, stable, and secure (the army having 
grown to 1 ,800 regulars). Crime continued to exist during the Fran- 
ciata (the period of Francia' s rule), but criminals were treated 
leniently. Murderers, for example, were put to work on public 
projects. Asylum for political refugees from other countries became 
a Paraguayan hallmark. An extremely frugal and honest man, Fran- 
cia left the state treasury with at least twice as much money in it 
as when he took office, including 36,500 pesos of his unspent salary, 
or at least several years' salary. 

The state soon developed native industries in shipbuilding and 
textiles, a centrally planned and administered agricultural sector, 



21 



Paraguay: A Country Study 

which was more diversified and productive than the prior export 
monoculture, and other manufacturing capabilities. These develop- 
ments supported Francia's policy of virtual economic autarchy. 

But Francia's greatest accomplishment — the preservation of 
Paraguayan independence — resulted directly from a noninterven- 
tionist foreign policy. Deciding that Argentina was a potential threat 
to Paraguay, he shifted his foreign policy toward Brazil by quickly 
recognizing Brazilian independence in 1821 . This move, however, 
resulted in no special favors for the Brazilians from Francia, who 
was also on good, if limited, terms with Juan Manuel Rosas, the 
Argentine dictator. Francia prevented civil war and secured his 
role as dictator when he cut off his internal enemies from their 
friends in Buenos Aires. Despite his "isolationist" policies, Fran- 
cia conducted a profitable but closely supervised import-export trade 
with both countries to obtain key foreign goods, particularly 
armaments. A more activist foreign policy than Francia's probably 
would have made Paraguay a battleground amid the swirl of revo- 
lution and war that swept Argentina, Uruguay, and southern Brazil 
in the decades following independence. 

All of these political and economic developments put Paraguay 
on the path of independent nationhood, yet the country's undoubted 
progress during the years of the Franciata took place because of 
complete popular abdication to Francia's will. El Supremo per- 
sonally controlled every aspect of Paraguayan public life. No 
decision at the state level, no matter how small, could be made 
without his approval. All of Paraguay's accomplishments during 
this period, including its existence as a nation, were attributable 
almost entirely to Francia. The common people saw these accom- 
plishments as Francia's gifts, but along with these gifts came political 
passivity and naivete among most Paraguayans. 

Dictatorship and War 

Carlos Antonio Lopez 

Confusion overtook the state in the aftermath of Francia's 
death on September 20, 1840, because El Supremo, now El Difunto 
(the Dead One), had left no successor. After a few days, a junta 
emerged, freed some political prisoners, and soon proved itself 
ineffectual at governing. In January 1841, the junta was over- 
thrown. Another coup followed sixteen days later, and chaos con- 
tinued until in March 1841 congress chose Carlos Antonio Lopez 
as first consul. In 1844 another congress named Lopez president 
of the republic, a post he held until his death in 1862. Paraguay 
had its second dictator. 



22 



Residence of Carlos Antonio Lopez 
and Francisco Solano Lopez, Asuncion 
Courtesy Tim Merrill 

Lopez, a lawyer, was one of the most educated men in the coun- 
try. Until his elevation to consul, Lopez, born in 1787, had lived 
in relative obscurity. Although Lopez's government was similar 
to Francia's system, his appearance, style, and policies were quite 
different. In contrast to Francia, who was lean, Lopez was obese — a 
"great tidal wave of human flesh," according to one who knew 
him. Lopez was a despot who wanted to found a dynasty and run 
Paraguay like a personal fiefdom. Francia had pictured himself as 
the first citizen of a revolutionary state, whereas Lopez used the 
all-powerful state bequeathed by the proverbially honest Francia 
to enrich himself and his family. 

Lopez soon became the largest landowner and cattle rancher in 
the country, amassing a fortune, which he augmented with the 
state's monopoly profits from the yerba mate trade. Despite his 
greed, Paraguay prospered under El Excelentfsimo (the Most 
Excellent One), as Lopez was known. Under Lopez, Paraguay's 
population increased from about 220,000 in 1840 to about 400,000 
in 1860. Several highways and a telegraph system were built. A 
British firm began building a railroad, one of South America's first, 
in 1858. During his term of office, Lopez improved national defense, 
abolished the remnants of the reducciones, stimulated economic 
development, and tried to strengthen relations with foreign 



23 



Paraguay: A Country Study 



countries. He also took measures to reduce the threat to settled 
Paraguayans from the marauding Indian tribes that still roamed 
the Chaco. Paraguay also made large strides in education. When 
Lopez took office, Asuncion had only one primary school. During 
Lopez's reign, more than 400 schools were built for 25,000 primary 
students, and the state reinstituted secondary education. Lopez's 
educational development plans progressed with difficulty, however, 
because Francia had purged the country of the educated elite, which 
included teachers. 

Less rigorous than Francia, Lopez loosened restrictions on for- 
eign intercourse, boosted exports, invited foreign physicians, 
engineers, and investors to settle in Paraguay, and paid for stu- 
dents to study abroad. He also sent his son Francisco Solano to 
Europe to buy guns. 

Like Francia, Lopez had the overriding aim of defending and 
preserving Paraguay. He launched reforms with this goal in mind. 
Trade eased arms acquisitions and increased the state's income. 
Foreign experts helped build an iron factory and a large armory. 
The new railroad was to be used to transport troops. Lopez used 
diplomacy to protect the state's interests abroad. Yet despite his 
apparent liberality, Lopez was a dictator who held Paraguayans 
on a tight leash. He allowed Paraguayans no more freedom to 
oppose the government than they had had under Francia. Con- 
gress became his puppet, and the people abdicated their political 
rights, a situation enshrined in the 1844 constitution, which placed 
all power in Lopez's hands. 

Under Lopez, Paraguay began to tackle the question of slav- 
ery, which had existed since early colonial days. Settlers had brought 
a few slaves to work as domestic servants, but were generally lenient 
about their bondage. Conditions worsened after 1700, however, 
with the importation of about 50,000 African slaves to be used as 
agricultural workers. Under Francia, the state acquired about 1 ,000 
slaves when it confiscated property from the elite. Lopez did not 
free these slaves; instead, he enacted the 1842 Law of the Free 
Womb, which ended the slave trade and guaranteed that the chil- 
dren of slaves would be free at age twenty-five. But the new law 
served only to increase the slave population and depress slave prices 
as slave birthrates soared. 

Foreign relations began to increase in importance under Lopez, 
who retained Paraguay's traditional mistrust of the surround- 
ing states, yet lacked Francia' s diplomatic adroitness. Initially 
Lopez feared an attack by the Buenos Aires dictator Rosas. With 
Brazilian encouragement, Lopez had dropped Francia' s policy 



24 



Historical Setting 



of neutrality and began meddling in Argentine politics. Using the 
slogan ''Independence or Death," Lopez declared war against 
Rosas in 1845 to support an unsuccessful rebellion in the Argen- 
tine province of Corrientes. Although complications with Britain 
and France prevented him from moving against Paraguay, Rosas 
quickly established aporteno embargo on Paraguayan goods. After 
Rosas fell in 1852, Lopez signed a treaty with Buenos Aires that 
recognized Paraguay's independence, although the Argentines 
never ratified it. In the same year, Lopez signed treaties of friend- 
ship, commerce, and navigation with France and the United States. 
Nonetheless, growing tensions with several countries, including the 
United States, characterized the second half of Lopez's rule. In 
1858 the United States sent a flotilla to Paraguayan waters in a 
successful action to claim compensation for an American sailor who 
had been killed three years earlier. 

Although he wore his distrust for foreigners like a badge of loyalty 
to the nation, Lopez was not as cautious as he appeared. Lopez 
recklessly dropped Francia's key policies of neutrality without mak- 
ing the hard choices and compromises about where his allegiances 
lay. He allowed unsettled controversies and boundary disputes with 
Brazil and Argentina to smolder. The two regional giants had toler- 
ated Paraguayan independence, partly because Paraguay served 
to check the expansionist tendencies of the other. Both were satis- 
fied if the other could not dominate Paraguayan affairs. At the same 
time, however, a Paraguay that was antagonistic to both Brazil 
and Argentina would give these countries a reason for uniting. 

Francisco Solano Lopez 

Born in 1826, Francisco Solano Lopez became the second and 
final ruler of the Lopez dynasty. He had a pampered childhood. 
His father raised him to inherit his mande and made him a brigadier 
general at the age of eighteen. He was an insatiable womanizer, 
and stories abound of the cruel excesses he resorted to when a 
woman had the courage to turn him down. His 1853 trip to Europe 
to buy arms was undoubtedly the most important experience of 
his life; his stay in Paris proved to be a turning point for him. There, 
Solano Lopez admired the trappings and pretensions of the French 
empire of Napoleon III. He fell in love with an Irish woman named 
Elisa Alicia Lynch, whom he made his mistress. "La Lynch," as 
she became known in Paraguay, was a strong-willed, charming, 
witty, intelligent woman who became a person of enormous 
influence in Paraguay because of her relationship with Solano 
Lopez. Lynch 's Parisian manners soon made her a trendsetter in 
the Paraguayan capital, and she made enemies as quickly as she 



25 



Paraguay: A Country Study 

made friends. Lynch bore Solano Lopez five sons, although the 
two never married. She became the largest landowner in Paraguay 
after Solano Lopez transferred most of the country and portions 
of Brazil to her name during the war, yet she retained practically 
nothing when the war ended. She buried Solano Lopez with her 
own hands after the last battle in 1870 and died penniless some 
years later in Europe. 

Solano Lopez consolidated his power after his father's death in 
1862 by silencing several hundred critics and would-be reformers 
through imprisonment. Another Paraguayan congress then unani- 
mously elected him president. Yet Solano Lopez would have done 
well to heed his father's last words to avoid aggressive acts in for- 
eign affairs, especially with Brazil. Francisco's foreign policy vastly 
underestimated Paraguay's neighbors and overrated Paraguay's 
potential as a military power. 

Observers sharply disagreed about Solano Lopez. George 
Thompson, an English engineer who worked for the younger Lopez 
(he distinguished himself as a Paraguayan officer during the War 
of the Triple Alliance, and later wrote a book about his experience) 
had harsh words for his ex-employer and commander, calling him 
"a monster without parallel." Solano Lopez's conduct laid him 
open to such charges. In the first place, Solano Lopez's miscalcu- 
lations and ambitions plunged Paraguay into a war with Argentina, 
Brazil, and Uruguay. The war resulted in the deaths of half of 
Paraguay's population and almost erased the country from the map. 
During the war, Solano Lopez ordered the executions of his own 
brothers and had his mother and sisters tortured when he suspected 
them of opposition. Thousands of others, including Paraguay's 
bravest soldiers and generals, also went to their deaths before fir- 
ing squads or were hacked to pieces on Solano Lopez's orders. 
Others saw Solano Lopez as a paranoid megalomaniac, a man who 
wanted to be the "Napoleon of South America," willing to reduce 
his country to ruin and his countrymen to beggars in his vain quest 
for glory. 

However, sympathetic Paraguayan nationalists and foreign revi- 
sionist historians have portrayed Solano Lopez as a patriot who 
resisted to his last breath Argentine and Brazilian designs on 
Paraguay. They portrayed him as a tragic figure caught in a web 
of Argentine and Brazilian duplicity who mobilized the nation to 
repulse its enemies, holding them off heroically for five bloody, 
horror-filled years until Paraguay was finally overrun and pros- 
trate. Since the 1930s, Paraguayans have regarded Solano Lopez 
as the nation's foremost hero. 



26 



Historical Setting 



Solano Lopez's basic failing was that he did not recognize the 
changes that had occurred in the region since Francia's time. Under 
his father's rule, the protracted, bloody, and distracting birth pangs 
of Argentina and Uruguay; the bellicose policies of Brazil; and Fran- 
cia's noninterventionist policies had worked to preserve Paraguayan 
independence. Matters had decidedly settled down since then in 
both Argentina and Brazil, as both countries had become surer 
of their identities and more united. Argentina, for example, began 
reacting to foreign challenges more as a nation and less like an 
assortment of squabbling regions, as Paraguayans had grown to 
expect. Solano Lopez's attempt to leverage Paraguay's emergence 
as a regional power equal to Argentina and Brazil had disastrous 
consequences. 

The War of the Triple Alliance 

Solano Lopez accurately assessed the September 1864 Brazilian 
intervention in Uruguay as a slight to the region's lesser powers. 
He was also correct in his assumption that neither Brazil nor 
Argentina paid much attention to Paraguay's interests when they 
formulated their policies. But he concluded incorrectly that preserv- 
ing Uruguayan "independence" was crucial to Paraguay's future 
as a nation. Consistent with his plans to start a Paraguayan "third 
force" between Argentina and Brazil, Solano Lopez committed 
the nation to Uruguay's aid. When Argentina failed to react to 
Brazil's invasion of Uruguay, Solano Lopez seized a Brazilian war- 
ship in November 1864. He quickly followed this move with an 
invasion of Mato Grosso, Brazil, in March 1865, an action that 
proved to be one of Paraguay's few successes during the war. Solano 
Lopez then decided to strike at his enemy's main force in Uru- 
guay. But Solano Lopez was unaware that Argentina had 
acquiesced to Brazil's Uruguay policy and would not support 
Paraguay against Brazil. When Solano Lopez requested permis- 
sion for his army to cross Argentine territory to attack the Brazilian 
province of Rio Grande do Sul, Argentina refused. Undeterred, 
Solano Lopez sent his forces into Argentina, probably expecting 
local strongmen to rebel and remove Argentina from the picture. 
Instead, the action set the stage for the May 1865 signing by 
Argentina, Brazil, and Uruguay (now reduced to puppet status) 
of the Treaty of the Triple Alliance. Under the treaty, these nations 
vowed to destroy Solano Lopez's government. 

Paraguay was in no sense prepared for a major war, let alone 
a war of the scope that Solano Lopez had unleashed. In terms of 
size, Solano Lopez's 30,000-man army was the most powerful in 
Latin America. But the army's strength was illusory because it 



27 



Paraguay: A Country Study 

lacked trained leadership, a reliable source of weapons and materiel, 
and adequate reserves. Since the days of El Supremo, the officer 
corps had been neglected for political reasons. The army suffered 
from a critical shortage of key personnel, and many of its fighting 
units were undermanned. Paraguay lacked the industrial base to 
replace weapons lost in battle, and the Argentine-Brazilian alli- 
ance prevented Solano Lopez from receiving arms from abroad. 
Paraguay's population was only about 450,000 in 1865 — a figure 
lower than the number of people in the Brazilian National Guard — 
and amounted to less than one-twentieth of the combined allied 
population of 1 1 million. Even after conscripting for the front every 
able-bodied man — including children as young as ten — and forc- 
ing women to perform all nonmilitary labor, Solano Lopez still could 
not field an army as large as those of his rivals. 

Apart from some Paraguayan victories on the northern front, 
the war was a disaster for Solano Lopez. The core units of the 
Paraguayan army reached Corrientes in April 1865. By July more 
than half of Paraguay's 30,000-man invasion force had been killed 
or captured along with the army's best small arms and artillery. 
The war quickly became a desperate struggle for Paraguay's 
survival. 

Paraguay's soldiers exhibited suicidal bravery, especially con- 
sidering that Solano Lopez shot or tortured so many of them for 
the most trivial offenses. Cavalry units operated on foot for lack 
of horses. Naval infantry battalions armed only with machetes 
attacked Brazilian ironclads. The suicide attacks resulted in fields 
of corpses. Cholera was rampant. By 1867 Paraguay had lost 60,000 
men to casualties, disease, or capture, and another 60,000 sol- 
diers were called to duty. Solano Lopez conscripted slaves, and 
infantry units formed entirely of children appeared. Women were 
forced to perform support work behind the lines. Materiel short- 
ages were so severe that Paraguayan troops went into battle semi- 
nude, and even colonels went barefoot, according to one observer. 
The defensive nature of the war, combined with Paraguayan 
tenacity and ingenuity and the difficulty that Brazilians and 
Argentinians had cooperating with each other, rendered the con- 
flict a war of attrition. In the end, Paraguay lacked the resources 
to continue waging war against South America's giants. 

As the war neared its inevitable denouement, Solano Lopez's 
grip on reality — never very strong — loosened further. Imagin- 
ing himself surrounded by a vast conspiracy, he ordered thou- 
sands of executions in the military. In addition, he executed 2 
brothers and 2 brothers-in-law, scores of top government and 
military officials, and about 500 foreigners, including many 



28 



Historical Setting 



diplomats. He frequently had his victims killed by lance thrusts 
to save ammunition. The bodies were dumped into mass graves. 
His cruel treatment of prisoners was proverbial. Solano Lopez con- 
demned troops to death if they failed to carry out his orders to the 
minutest detail. "Conquer or die" became the order of the day. 

Solano Lopez's hostility even extended to United States Ambas- 
sador Charles A. Washburn. Only the timely arrival of the United 
States gunboat Wasp saved the diplomat from arrest. 

Allied troops entered Asuncion in January 1869, but Solano 
Lopez held out in the northern jungles for another fourteen months 
until he finally died in battle. The year 1870 marked the lowest 
point in Paraguayan history. Hundreds and thousands of Para- 
guayans had died. Destitute and practically destroyed, Paraguay 
had to endure a lengthy occupation by foreign troops and cede large 
patches of territory to Brazil and Argentina. 

Despite several historians' accounts of what happened between 
1865 and 1870, Solano Lopez was not wholly responsible for the 
war. Its causes were complex and included Argentine anger over 
Antonio Lopez's meddling in Corrientes. The elder Lopez also had 
infuriated the Brazilians by not helping to overthrow Rosas in 1852 
and by forcing Brazilian garrisons out of territory claimed by 
Paraguay in 1850 and 1855. Antonio Lopez also resented having 
been forced to grant Brazil free navigation rights on the Rio 
Paraguay in 1858. Argentina meanwhile disputed ownership of the 
Misiones district between the Rio Parana and Rio Uruguay, and 
Brazil had its own ideas about the Brazil-Paraguay boundary. To 
these problems was added the Uruguayan vortex. Carlos Antonio 
Lopez had survived mainly with caution and a good bit of luck; 
Solano Lopez had neither. 

Liberals Versus Colorados 

The Postwar Period 

Ruined by war, pestilence, famine, and foreign indemnities 
(which were never paid), Paraguay was on the verge of disintegra- 
tion in 1870. But its fertile soil and the country's overall backward- 
ness probably helped it survive. After the war, Paraguay's mostly 
rural populace continued to subsist as it had done for centuries, 
eking out a meager existence in the hinterland under unimagina- 
bly difficult conditions. The allied occupation of Asuncion in 1869 
put the victors in direct control of Paraguayan affairs. While Bolivia 
pressed its nebulous claim to the Chaco, Argentina and Brazil swal- 
lowed huge chunks of Paraguayan territory (around 154,000 square 
kilometers). 



29 



Paraguay: A Country Study 

Brazil had borne the brunt of the fighting, with perhaps 150,000 
dead and 65,000 wounded. It had spent US$200 million, and its 
troops formed the senior army of occupation in the country, so it 
was logical that Rio de Janeiro temporarily overshadowed Buenos 
Aires in Asuncion. Sharp disagreements between the two powers 
prolonged the occupation until 1876. Ownership of the Paraguayan 
economy quickly passed to foreign speculators and adventurers who 
rushed to take advantage of the rampant chaos and corruption. 

The internal political vacuum was at first dominated by survivors 
of the Paraguayan Legion. This group of exiles, based in Buenos 
Aires, had regarded Solano Lopez as a mad tyrant and fought for 
the allies during the war. The group set up a provisional govern- 
ment in 1869 mainly under Brazilian auspices and signed the 1870 
peace accords, which guaranteed Paraguay's independence and free 
river navigation. A constitution was also promulgated in the same 
year, but it proved ineffective because of the foreign origin of its 
liberal, democratic tenets. After the last foreign troops had gone 
in 1876 and an arbitral award to Paraguay of the area between 
the Rio Verde and Rio Pilcomayo by an international commis- 
sion headed by Rutherford B. Hayes, United States president, the 
era of party politics in Paraguay was free to begin in earnest. 
Nonetheless, the evacuation of foreign forces did not mean the end 
of foreign influence. Both Brazil and Argentina remained deeply 
involved in Paraguay because of their connections with Paraguay's 
rival political forces. These forces eventually came to be known 
as the Colorados and the Liberals. 

The political rivalry between Liberals and Colorados was 
presaged as early as 1869 when the terms Azules (Blues) and Colora- 
dos (Reds) first appeared. The National Republican Association-. 
Colorado Party (Asociacion Nacional Republicana-Partido 
Colorado) dominated Paraguayan political life from the late 1880s 
until Liberals overthrew it in 1904. The Liberal ascent marked the 
decline of Brazil, which had supported the Colorados as the prin- 
cipal political force in Paraguay, and the rise of Argentine influence. 

In the decade following the war, the principal political conflicts 
within Paraguay reflected the Liberal-Colorado split, with Legion- 
naires battiing Lopiztas (ex-followers of Solano Lopez) for power, 
while Brazil and Argentina maneuvered in the background. The 
Legionnaires saw the Lopiztas as reactionaries. The Lopiztas 
accused the Legionnaires of being traitors and foreign puppets. The 
situation defied neat categories, since many people constantly 
changed sides. Opportunism characterized this era, not ideologi- 
cal purity. 



30 



Historical Setting 



The Legionnaires were a motley collection of refugees and ex- 
iles who dated from Francia's day. Their opposition to tyranny 
was sincere, and they gravitated toward democratic ideologies. 
Coming home to backward, poor, xenophobic Paraguay from cos- 
mopolitan, prosperous Buenos Aires was a big shock for the Legion- 
naires. Believing that more freedom would cure Paraguay's ills, 
they abolished slavery and founded a constitutional government 
as soon as they came to power. They based the new government 
on the standard liberal prescriptions of free enterprise, free elec- 
tions, and free trade. 

The Legionnaires, however, had no more experience in democ- 
racy than other Paraguayans. The 1870 constitution quickly became 
irrelevant. Politics degenerated into factionalism, and cronyism and 
intrigue prevailed. Presidents still acted like dictators, elections did 
not stay free, and the Legionnaires were out of power in less than 
a decade. 

Free elections were a startling, and not altogether welcome, 
innovation for ordinary Paraguayans, who had always allied them- 
selves with a. patron (benefactor) for security and protection. At the 
same time, Argentina and Brazil were not content to leave Paraguay 
with a truly free political system. Pro- Argentine militia chief 
Benigno Ferreira emerged as de facto dictator until his overthrow 
with Brazilian help in 1874. Ferreira later returned to lead the 1904 
Liberal uprising, which ousted the Colorados. Ferreira served as 
president between 1906 and 1908. 

The First Colorado Era 

Candido Bareiro, Lopez's ex-commercial agent in Europe, 
returned to Paraguay in 1869 and formed a major Lopizta faction. 
He also recruited General Bernadino Caballero, a war hero with 
close ties to Lopez. After President Juan Bautista Gil was assassi- 
nated in 1877, Caballero used his power as army commander to 
guarantee Bareiro 's election as president in 1878. When Bareiro 
died in 1880, Caballero seized power in a coup. Caballero domi- 
nated Paraguayan politics for most of the next two decades, either 
as president or through his power in the militia. His accession to 
power is notable because he brought political stability, founded a 
ruling party — the Colorados — to regulate the choice of presidents 
and the distribution of spoils, and began a process of economic 
reconstruction. 

Despite their professed admiration for Francia, the Colorados 
dismantled Francia's unique system of state socialism. Desperate 
for cash because of heavy debts incurred in London in the early 
postwar period, the Colorados lacked a source of funds except 



31 



Paraguay: A Country Study 



through the sale of the state's vast holdings, which comprised more 
than 95 percent of Paraguay's total land. Caballero's government 
sold much of this land to foreigners in huge lots. While Colorado 
politicians raked in the profits and themselves became large land- 
owners, peasant squatters who had farmed the land for genera- 
tions were forced to vacate and, in many cases, to emigrate. By 
1900 seventy-nine people owned half of the country's land. 

Although the Liberals had advocated the same land- sale policy, 
the unpopularity of the sales and evidence of pervasive government 
corruption produced a tremendous outcry from the opposition. Liber- 
als became bitter foes of selling land, especially after Caballero bla- 
tandy rigged the 1886 election to ensure a victory for General Patricio 
Escobar. Ex-Legionnaires, idealistic reformers, and former Lopiz- 
tas joined in July 1887 to form the Centro Democratico (Democratic 
Center), a precursor of the Liberal party, to demand free elections, 
an end to land sales, civilian control over the military, and clean 
government. Caballero responded, along with his principal adviser, 
Jose Segundo Decoud, and Escobar, by forming the Colorado Party 
one month later, thus formalizing the political cleavage. 

Both groups were deeply factionalized, however, and very little 
ideology separated them. Colorado and Liberal partisans changed 
sides whenever it proved advantageous. While the Colorados re- 
inforced their monopoly on power and spoils, Liberals called for 
reform. Frustration provoked an aborted Liberal revolt in 1891 
that produced changes in 1893, when war minister General Juan 
B. Egusquiza overthrew Caballero's chosen president, Juan G. 
Gonzalez. Egusquiza startled Colorado stalwarts by sharing power 
with the Liberals, a move that split both parties. Ex-Legionnaire 
Ferreira, along with the civico (civic) wing of the Liberals, joined 
the government of Egusquiza — who left office in 1898 — to allow 
a civilian, Emilio Aceval, to become president. Liberal radicates (rad- 
icals) who opposed compromising with their Colorado enemies boy- 
cotted the new arrangement. Caballero, also boycotting the alliance, 
plotted to overthrow civilian rule and succeeded when Colonel Juan 
Antonio Ezcurra seized power in 1902. This victory was Caballero's 
last, however. In 1904, General Ferreira, with the support of civicos, 
radicates, and egusquistas, invaded from Argentina. After four months 
of fighting, Ezcurra signed the Pact of Pilcomayo aboard an 
Argentine gunboat on December 12, 1904, and handed power to 
the Liberals. 

Liberal Decades 

The revolution of August 1904 began as a popular movement, 
but liberal rule quickly degenerated into factional feuding, military 

32 



Santisima Trinidad Church in Asuncion, 
the original burial place of Carlos Antonio Lopez 

Courtesy Tim Merrill 

coups, and civil war. Political instability was extreme in the Liberal 
era, which saw twenty-one governments in thirty- six years. Dur- 
ing the period 1904 to 1922, Paraguay had fifteen presidents. By 
1908 the radicales had overthrown General Ferreira and the civicos. 
The Liberals had disbanded Caballero's army when they came to 
power and organized a completely new one. Nevertheless, by 1910 
army commander Colonel Albino Jara felt strong enough to stage 
a coup against President Manuel Gondra. Jara's coup backfired 
as it touched off an anarchic two-year period in which every major 
political group seized power at least once. The radicales again invaded 
from Argentina, and when the charismatic Eduardo Schaerer 
became president, Gondra returned as minister of war to reorganize 
the army once more. Schaerer became the first president since 
Egusquiza to finish his four-year term. 

The new political calm was shattered, however, when the radicales 
split into Schaerer and Gondra factions. Gondra won the presiden- 
tial election in 1920, but the schaereristas successfully undermined him 
and forced him to resign. Full-scale fighting between the factions 
broke out in May 1922 and lasted for fourteen months. The gon- 
dristas beat the schaereristas decisively and held on to power until 1936. 

Laissez-faire Liberal policies had permitted a handful of hacen- 
dados to exercise almost feudal control over the countryside, while 



33 



Paraguay: A Country Study 

peasants had no land and foreign interests manipulated Paraguay's 
economic fortunes. The Liberals, like the Colorados, were a deeply 
factionalized political oligarchy. Social conditions — always mar- 
ginal in Paraguay — deteriorated during the Great Depression of 
the 1930s. The country clearly needed reforms in working condi- 
tions, public services, and education. The stage was set for an anti- 
Liberal nationalist reaction that would change the direction of 
Paraguayan history. 

Paraguay's dispute with Bolivia over the Chaco, a struggle that 
had been brewing for decades, finally derailed the Liberals. Wars 
and poor diplomacy had prevented the settling of boundaries 
between the two countries during the century following indepen- 
dence. Although Paraguay had held the Chaco for as long as any- 
one could remember, the country did little to develop the area. 
Aside from scattered Mennonite colonies and nomadic Indian 
tribes, few people lived there (see Natural Regions; Minority 
Groups, ch. 2). Bolivia's claim to the Chaco became more urgent 
after it lost its seacoast to Chile during the 1879-84 War of the 
Pacific. Left without any outlet to the sea, Bolivia wanted to absorb 
the Chaco and expand its territory up to the Rio Paraguay in order 
to gain a river port. In addition, the Chaco' s economic potential 
intrigued the Bolivians. Oil had been discovered there by Stan- 
dard Oil Company in the 1920s, and people wondered whether 
an immense pool of oil was lying beneath the entire area. Ironically, 
South America's two greatest victims of war and annexation in the 
previous century were ready to face each other in another bout of 
bloody combat, this time over a piece of apparently desolate 
wilderness. 

While Paraguayans were busy fighting among themselves dur- 
ing the 1920s, Bolivians established a series of forts in the 
Paraguayan Chaco. In addition, they bought armaments from Ger- 
many and hired German military officers to train and lead their 
forces. Frustration in Paraguay with Liberal inaction boiled over 
in 1928 when the Bolivian army established a fort on the Rio 
Paraguay called Fortfn Vanguardia. In December of that year, 
Paraguayan major (later colonel) Rafael Franco took matters into 
his own hands, led a surprise attack on the fort, and succeeded 
in destroying it. The routed Bolivians responded quickly by seiz- 
ing two Paraguayan forts. Both sides mobilized, but the Liberal 
government felt unprepared for war so it agreed to the humiliat- 
ing condition of rebuilding Fortfn Vanguardia for the Bolivians. 
The Liberal government also provoked criticism when it forced 
Franco, by then a national hero, to retire from the army. 



34 



Historical Setting 



As diplomats from Argentina, the United States, and the League 
of Nations conducted fruitless "reconciliation" talks, Colonel Jose 
Felix Estigarribia, Paraguay's deputy army commander, ordered 
his troops into action against Bolivian positions early in 1931 . Mean- 
while, nationalist agitation led by the National Independent League 
(Liga Nacional Independiente) increased. Formed in 1928 by a 
group of intellectuals, the League sought a new era in national life 
that would witness a great political and social rebirth. Its adher- 
ents advocated a "new democracy" that might sweep the country 
free of petty partisan interests and foreign encroachments. An amal- 
gam of diverse ideologies and interests, the League reflected a 
genuine popular wish for social change. When government troops 
in October 1931 fired on a mob of League students demonstrating 
in front of the Government Palace, the Liberal administration of 
President Jose Guggiari lost what little legitimacy it retained. The 
students and soldiers of the rising "New Paraguay" movement 
(which wanted to sweep away corrupt party politics and introduce 
nationalist and socialist reforms) would thereafter always see the 
Liberals as morally bankrupt. 

The Chaco War and the February Revolution 

When war finally broke out officially in July 1932, the Bolivians 
were confident of a rapid victory. Their country was richer and 
more populous than Paraguay, and their armed forces were larger, 
had a superior officer corps, and were well-trained and well- 
equipped. These advantages quickly proved irrelevant in the face 
of the Paraguayans' zeal to defend their homeland. The highly moti- 
vated Paraguayans knew the geography of the Chaco better than 
the Bolivians and easily infiltrated Bolivian lines, surrounded out- 
posts, and captured supplies. In contrast, Indians from the Bolivian 
high plateau area, known as the Altiplano, were forced into the 
Bolivian army, had no real interest in the war, and failed to adapt 
to the hot Chaco climate. In addition, long supply lines, poor roads, 
and weak logistics hindered the Bolivian campaign. The Para- 
guayans proved more united than the Bolivians — at least initially — 
as President Eusebio Ayala and Colonel (later Marshal) Estigar- 
ribia worked well together. 

After the December 1933 Paraguayan victory at Campo Via, 
Bolivia seemed on the verge of surrendering. At that moment, 
however, President Ayala agreed to a truce. His decision was 
greeted with derision in Asuncion. Instead of ending the war with 
a swift victory that might have boosted their political prospects, 
the Liberals signed a truce that seemed to allow the Bolivians to 
regroup. The war continued until July 1935. Although the Liberals 



35 



Paraguay: A Country Study 

had successfully led Paraguay's occupation of nearly all the dis- 
puted territory and had won the war when the last truce went into 
effect, they were finished politically. 

In many ways, the Chaco War acted as a catalyst to unite the 
political opposition with workers and peasants, who furnished the 
raw materials for a social revolution. After the 1935 truce, thou- 
sands of soldiers were sent home, leaving the regular army to patrol 
the front lines. The soldiers who had shared the dangers and trials 
of the battlefield deeply resented the ineptitude and incompetence 
they believed the Liberals had shown in failing to prepare the coun- 
try for war. These soldiers had witnessed the miserable state of the 
Paraguayan army and were forced in many cases to face the enemy 
armed only with machetes. After what they had been through, par- 
tisan political differences seemed irrelevant. The government 
offended the army rank-and-file by refusing to fund pensions for 
disabled war veterans in 1936 while awarding 1,500 gold pesos a 
year to Estigarribia. Colonel Franco, back on active duty since 1932, 
became the focus of the nationalist rebels inside and outside the 
army. The final spark to rebellion came when Franco was exiled 
for criticizing Ayala. On February 17, 1936, units of the army 
descended on the Presidential Palace and forced Ayala to resign, 
ending thirty-two years of Liberal rule. 

Outside Paraguay, the February revolt seemed to be a paradox 
because it overthrew the politicians who had won the war. The sol- 
diers, veterans, students, and others who revolted felt, however, 
that victory had come despite the Liberal government. Promising 
a national and social revolution, the Febrerista Revolutionary Party 
(Partido Revolucionario Febrerista — PRF) — more commonly 
known as the Febreristas — brought Colonel Franco back from exile 
in Argentina to be president. The Franco government showed it 
was serious about social justice by expropriating more than 200,000 
hectares of land and distributing it to 10,000 peasant families. In 
addition, the new government guaranteed workers the right to strike 
and established an eight-hour work day. Perhaps the government's 
most lasting contribution affected national consciousness. In a 
gesture calculated to rewrite history and erase seven decades of 
national shame, Franco declared Solano Lopez a national hero sin 
ejemplar (without precedent) because he had stood up to foreign 
threats and sent a team to Cerro Cora to find his unmarked grave. 
The government interred his remains along with those of his father 
in a chapel designated the National Pantheon of Heroes, and later 
erected a monument to him on Asuncion's highest hill. 

Despite the popular enthusiasm that greeted the February revo- 
lution, the new government lacked a clear program. A sign of the 



36 



Historical Setting 



times, Franco practiced his Mussolini-style, spellbinding oratory 
from a balcony. But when he published his distinctly fascist- 
sounding Decree Law No. 152 promising a "totalitarian transfor- 
mation" similar to those in Europe, protests erupted. The youth- 
ful, idealistic elements that had come together to produce the 
Febrerista movement were actually a hodgepodge of conflicting 
political tendencies and social opposites, and Franco was soon in 
deep political trouble. Franco's cabinet reflected almost every con- 
ceivable shade of dissident political opinion, and included socialists, 
fascist sympathizers, nationalists, Colorados, and Liberal civicos. 
A new party of regime supporters, the Revolutionary National 
Union (Union Nacional Revolucionaria), was founded in Novem- 
ber 1936. Although the new party called for representative democ- 
racy, rights for peasants and workers, and socialization of key 
industries, it failed to broaden Franco's political base. In the end, 
Franco forfeited his popular support because he failed to keep his 
promises to the poor. He dared not expropriate the properties of 
foreign landowners, who were mostly Argentines. In addition, the 
Liberals, who still had influential support in the army, agitated 
constantly for Franco's overthrow. When Franco ordered Para- 
guayan troops to abandon the advanced positions in the Chaco that 
they had held since the 1935 truce, the army revolted in August 
1937 and returned the Liberals to power. 

The army, however, did not hold a unified opinion about the 
Febreristas. Several attempted coups served to remind President 
Felix Pavia (the former dean of law at the National University) 
that although the February Revolution was out of power, it was 
far from dead. People who suspected that the Liberals had learned 
nothing from their term out of office soon had proof: a peace treaty 
signed with Bolivia on July 21, 1938, fixed the final boundaries 
behind the Paraguayan battle lines. In 1939 the Liberals, recog- 
nizing that they would have to choose someone with national sta- 
ture to be president if they wanted to hold onto power, picked 
General Estigarribia, the hero of the Chaco War who had since 
served as special envoy to the United States. Estigarribia quickly 
realized that he would have to adopt many Febrerista ideas to avoid 
anarchy. Circumventing the die-hard Liberals in the National 
Assembly who opposed him, Estigarribia assumed "temporary" 
dictatorial powers in February 1940, but promised the dictator- 
ship would end as soon as a workable constitution was written. 

Estigarribia vigorously pursued his goals. He began a land reform 
program that promised a small plot to every Paraguayan family. 
He reopened the university, balanced the budget, financed the pub- 
lic debt, increased the capital of the Central Bank, implemented 



37 



Paraguay: A Country Study 



monetary and municipal reforms, and drew up plans to build high- 
ways and public works. An August 1940 plebiscite endorsed 
Estigarribia's constitution, which remained in force until 1967. The 
constitution of 1940 promised a "strong, but not despotic" presi- 
dent and a new state empowered to deal directly with social and 
economic problems (see Constitutional Development, ch. 4). But 
by greatly expanding the power of the executive branch, the con- 
stitution served to legitimize open dictatorship. 

Mormigo and World War II 

The era of the New Liberals, as Estigarribia's supporters were 
called, came to a sudden end in September 1940, when the presi- 
dent died in an airplane crash. Hoping to control the government 
through a more malleable military man, the "Old Liberal" cabi- 
net named War Minister Higinio Mormigo president. Mormigo 
had gained fame in Paraguay by heading the 1936 expedition to 
Cerro Cora to retrieve Lopez's remains. The apparently genial 
Mormigo soon proved himself a shrewd politician with a mind of 
his own, and the Liberals resigned within a few weeks when they 
realized that they would not be able to impose their will on him. 
Having inherited Estigarribia's dictatorial powers, Mormigo quickly 
banned both Febreristas and Liberals and clamped down drasti- 
cally on free speech and individual liberties. A nonparty dictator 
without a large body of supporters, Mormigo survived politically — 
despite the numerous plots against him — because of his astute han- 
dling of an influential group of young military officers who held 
key positions of power. 

The outbreak of World War II eased Mormigo 's task of ruling 
Paraguay and keeping the army happy because it stimulated 
demand for Paraguayan export products — such as meat, hides, and 
cotton — and boosted the country's export earnings. More impor- 
tant, United States policy toward Latin America at this time made 
Paraguay eligible for major economic assistance. A surge of Ger- 
man influence in the region and Argentina's pro- Axis leanings 
alarmed the United States, which sought to wean Paraguay away 
from German and Argentine solicitation. At the same time, the 
United States sought to enhance its presence in the region and pur- 
sued close cooperation with Brazil, Argentina's traditional rival. 
To this end, the United States provided to Paraguay sizable 
amounts of funds and supplies under the Lend-Lease Agreement, 
provided loans for public works, and gave technical assistance in 
agriculture and health care. The United States Department of State 
approved of closer ties between Brazil and Paraguay and especially 



38 



Historical Setting 

supported Brazil's offer to finance a road project designed to reduce 
Paraguay's dependence on Argentina. 

Much to the displeasure of the United States and Britain, 
Morinigo refused to act against German economic and diplomatic 
interests until the end of the war. German agents had successfully 
converted many Paraguayans to the Axis cause. South America's 
first Nazi Party branch had been founded in Paraguay in 1931. 
German immigrant schools, churches, hospitals, farmers' cooper- 
atives, youth groups, and charitable societies became active Axis 
backers. All of those organizations prominently displayed swasti- 
kas and portraits of Adolf Hitler. 

It is no exaggeration to say that Morfnigo headed a pro-Axis 
regime. Large numbers of Paraguayan military officers and govern- 
ment officials were openly sympathetic to the Axis. Among these 
officials was the national police chief, who named his son Adolfo 
Hirohito after the leading Axis personalities. By 1941 the official 
newspaper, El Pais, had adopted an overtly pro-German stance. 
At the same time, the government strictiy controlled pro- Allied labor 
unions. Police cadets wore swastikas and Italian insignia on their 
uniforms. The December 1941 Japanese attack on Pearl Harbor 
and Germany's declaration of war against the United States gave 
the United States the leverage it needed, however, to force Morinigo 
to commit himself publicly to the Allied cause. Morinigo officially 
severed diplomatic relations with the Axis countries in 1942, 
although he did not declare war against Germany until February 
1945. Nonetheless, Morinigo continued to maintain close relations 
with the heavily German-influenced Argentine military through- 
out the war and provided a haven for Axis spies and agents. 

United States protests over German and Argentine activities in 
Paraguay fell on deaf ears. While the United States defined its 
interests in terms of resisting the fascist threat, Paraguayan offi- 
cials believed their interests lay in economic expediency and were 
reluctant to antagonize Germany until the outcome of the war was 
no longer in doubt. Many Paraguayans believed Germany was no 
more of a threat to Paraguay's sovereignty than the United States. 

The Allied victory convinced Morinigo to liberalize his regime. 
Paraguay experienced a brief democratic opening as Morinigo 
relaxed restrictions on free speech, allowed political exiles to return, 
and formed a coalition government. Morinigo 's intentions about 
stepping down were murky, however, and his de facto alliance with 
Colorado Party hardliners and their thuggish Guion Rojo (red 
script) paramilitary group antagonized the opposition. The result 
was a failed coup d'etat in December 1946 and full-scale civil war 
in March 1947. 



39 



Paraguay: A Country Study 



Led by Colonel Rafael Franco, the revolutionaries were an 
unlikely coalition of Febreristas, Liberals, and communists, united 
only in their desire to overthrow Morinigo. The Colorados helped 
Morinigo crush the insurgency, but the man who saved Morinigo' s 
government during crucial battles was the commander of the Gen- 
eral Brgez Artillery Regiment, Lieutenant Colonel Alfredo Stroess- 
ner Mattiauda. When a revolt at the Asuncion Navy Yard put a 
strategic working-class neighborhood in rebel hands, Stroessner's 
regiment quickly reduced the area to rubble. When rebel gunboats 
threatened to dash upriver from Argentina to bombard the capital 
into submission, Stroessner's forces battled furiously and knocked 
them out of commission. 

By the end of the rebellion in August, a single party — one that 
had been out of power since 1904 — had almost total control in 
Paraguay. The fighting had simplified politics by eliminating all 
parties except the Colorados and by reducing the size of the army. 
Because nearly four-fifths of the officer corps had joined the rebels, 
fewer individuals were now in a position to compete for power. 
As had often happened in the past, however, the Colorados split 
into rival factions. The hardline guionistas, headed by the fiery left- 
leaning nationalist writer and publisher Natalicio Gonzalez, opposed 
democratic practices. The moderate democrdticos, led by Federico 
Chaves, favored free elections and a power-sharing arrangement 
with the other parties. With Morinigo 's backing, Gonzalez used 
the Guion Rojo to cow the moderates and gain his party's presiden- 
tial nomination. In the Paraguayan tradition, he ran unopposed 
in the long-promised 1948 elections. Suspecting that Morinigo 
would not relinquish power to Gonzalez, a group of Colorado mili- 
tary officers, including Stroessner, removed Morinigo from office. 
Gonzalez joined Morinigo in exile early in 1949, and Chaves 
became president in 1950 as the military finally allowed power to 
pass to the democrdticos. 

Paraguayan politics had come full circle in a certain sense. The 
Chaco War had sparked the February revolution, which, in turn, 
sounded the death knell of the Liberal state and ushered in a revival 
of Paraguayan nationalism along with a reverence for the dictatorial 
past. The result was the constitution of 1940, which returned to 
the executive the power that the Liberals had stripped away. When 
a brief flirtation with democracy became a civil war after World 
War II, the Colorados, the party of the Lopiztas, were again run- 
ning Paraguay. In the interim, the influence of the armed forces 
had increased dramatically. Since the end of the Chaco War, no 
Paraguayan government has held power without the consent of the 
army. Morinigo maintained order by severely restricting individual 



40 



Historical Setting 



liberties but created a political vacuum. When he tried to fill it with 
the Colorado Party, he split the party in two, and neither faction 
could establish itself in power without help from the military. The 
institution of one-party rule, the establishment of order at the 
expense of political liberty, and the acceptance of the army's role 
of final political arbiter created the conditions that encouraged the 
emergence of the Stroessner regime. 

The Stronato 
The 1954 Coup 

Despite his reputation as a democrat, Chaves imposed a state 
of siege three weeks after he took office, aiming his emergency pow- 
ers at the supporters of Gonzalez and ex-President Felipe Molas 
Lopez. Mounting economic problems immediately confronted the 
new government. Two decades of extreme political and social 
unrest — including depression, war, and civil conflicts — had shat- 
tered Paraguay's economy. National and per capita income had 
fallen sharply, the Central Bank's practice of handing out soft loans 
to regime cronies was spurring inflation and a black market, and 
Argentina's economic woes were making themselves felt in 
Paraguay. Still, Chaves stayed in office without mishap; the country 
simply needed a rest. 

By 1953, however, the seventy-three-year-old president's polit- 
ical support began to erode markedly. His decision to run for reelec- 
tion disappointed younger men who nursed political ambitions, and 
rumors that Chaves would strengthen the police at the army's 
expense disappointed the military. Early in 1954, recentiy fired Cen- 
tral Bank Director Epifanio Mendez Fleitas joined forces with 
Stroessner — at that time a general and commander in chief of the 
armed forces — to oust Chaves. Mendez Fleitas was unpopular with 
Colorado Party stalwarts and the army, who feared that he was 
trying to build a following as did his hero, Juan Domingo Peron, 
Argentina's president from 1946 to 1955. In May 1954, Stroess- 
ner ordered his troops into action against the government after 
Chaves had tried to dismiss one of his subordinates. Fierce resistance 
by police left almost fifty dead. 

As the military "strongman" who made the coup, Stroessner was 
able to provide many of his supporters with positions in the provi- 
sional government. About two months later, a divided Colorado 
Party nominated Stroessner for president. For many party mem- 
bers, he represented an "interim" choice, as Mormigo had been 
for the Liberals in 1940. When Stroessner took office on August 
15, 1954, few people imagined that this circumspect, unassuming 



41 



Paraguay: A Country Study 

forty-one-year-old commander in chief would be a master politi- 
cian capable of outmaneuvering and outlasting them all. Nor was 
it apparent that his period of rule, known as the Stronato, would 
be longer than that of any other ruler in Paraguayan history. 

Consolidation of the Stroessner Regime 

The son of an immigrant German brewer and a Paraguayan 
woman, Stroessner was born in Encarnacion in 1912. He joined 
the army when he was sixteen and entered the triservice military 
academy, the Francisco Lopez Military College. Like Franco and 
Estigarribia, Stroessner was a hero of the Chaco War. He had 
gained a reputation for his bravery and his abilities to learn quickly 
and to command and inspire loyalty in troops. He was also known 
to be thorough and to have an unusual capacity for hard work. 
His extremely accurate political sense failed him only once, when 
he found himself in 1948 on the wrong side of a failed coup attempt 
and had to be driven to the Brazilian embassy in the trunk of a 
car, earning him the nickname "Colonel Trunk." Career consider- 
ations and an antipathy for communists possibly caused Stroess- 
ner to decide against joining the rebels in 1947. Morinigo found 
his talents indispensable during the civil war and promoted him 
rapidly. Because he was one of the few officers who had remained 
loyal to Morinigo, Stroessner became a formidable player once he 
entered the higher echelons of the armed forces. 

Repression was a key factor in Stroessner' s longevity (see 
Opposition Parties, ch. 4; Security and Political Offenses, ch. 5). 
Stroessner took a hard line from the beginning in his declaration 
of a state of siege, which he renewed carefully at intervals prescribed 
by the constitution. Except for a brief period in 1959, Stroessner 
renewed the state of siege every three months for the interior of 
the country until 1970 and for Asuncion until 1987. He was lucky 
from the outset; the retirement of Gonzalez and the death of Molas 
Lopez had removed two of his most formidable opponents. Another 
helpful coincidence was the September 1955 Argentine coup that 
deposed Peron, thus depriving Mendez Fleitas of his main poten- 
tial source of support. After the coup, Peron fled to Asuncion, where 
his meddling in Paraguayan politics complicated Mendez Fleitas 's 
position further and intensified the political struggle going on behind 
the scenes. Forced to play his hand after the Argentine junta com- 
pelled Peron to depart Asuncion for Panama in November, Mendez 
Fleitas prepared to stage a coup in late December. However, 
Stroessner purged the military of Mendez Fleitas 's supporters and 
made him go into exile in 1956. 



42 



Historical Setting 



To observers, Stroessner did not seem to be in a particularly 
strong position. He was hardly in control of the Colorado Party, 
which was full of competing factions and ambitious politicians, and 
the army was not a dependable supporter. The economy was in 
bad shape and deteriorating further. Stroessner's adoption of eco- 
nomic austerity measures proved unpopular with military officers, 
who had grown used to getting soft loans from the Central Bank; 
with businessmen, who disliked the severe tightening of credit; and 
with workers, who went out on strike when they no longer received 
pay raises. In addition, the new Argentine government, displeased 
with Stroessner's cordial relations with Peron, cancelled a trade 
agreement. 

A 1958 national plebiscite elected Stroessner to a second term, 
but dissatisfaction with the regime blossomed into a guerrilla 
insurgency soon afterward. Sponsored by exiled Liberals and 
Febreristas, small bands of armed men began to slip across the 
border from Argentina. Venezuela sent large amounts of aid to 
these groups starting in 1958. The following year, the new Cuban 
government under Fidel Castro Ruz also provided assistance. 

Stroessner's response was to employ the state's virtually unlimited 
power by giving a free hand to the military and to Minister of 
Interior Edgar Ynsfran, who harassed and allegedly murdered 
family members of some of the regime's foes. A cycle of terror and 
counter- terror began to make life in Paraguay precarious. 

The guerrillas received little support from Paraguay's conser- 
vative peasantry. The Colorado Party's peasant py nandi irregu- 
lars ("barefoot ones" in Guaranf), who had a well-deserved 
reputation for ferocity, often tortured and executed their prisoners. 
Growing numbers of people were interned in jungle concentration 
camps. Army troops and police smashed striking labor unions by 
taking over their organizations and arresting their leaders. 

In April 1959, however, Stroessner grudgingly decided to heed 
the growing call for reform within the army and the Colorado Party. 
He lifted the state of siege, allowed opposition exiles to return, ended 
press censorship, freed political prisoners, and promised to rewrite 
the 1940 constitution. After two months of this democratic 
"spring," the country was on the verge of chaos. In late May, 
nearly 100 people were injured when a student riot erupted in down- 
town Asuncion over a bus fare increase. The disturbance inspired 
the legislature to call for Ynsfran' s resignation. Stroessner responded 
swiftly by reimposing the state of siege and dissolving the legislature. 

An upsurge in guerrilla violence followed, but Stroessner once 
again parried the blow. Several factors strengthened Stroessner's 
hand. First, United States military aid was helping enhance the 



43 



Paraguay: A Country Study 

army's skills in counterinsurgency warfare. Second, the many 
purges of the Colorado Party had removed all opposition factions. 
In addition, Stroessner's economic policies had boosted exports and 
investment and reduced inflation, and the right-wing military coups 
in Brazil in 1964 and Argentina in 1966 also improved the inter- 
national climate for nondemocratic rule in Paraguay. 

Another major factor in Stroessner's favor was a change in atti- 
tude among his domestic opposition. Demoralized by years of fruit- 
less struggle and exile, the major opposition groups began to sue 
for peace. A Liberal Party faction, the Renovation Movement, 
returned to Paraguay to become the "official" opposition, leav- 
ing the remainder of the Liberal Party, which renamed itself the 
Radical Liberal Party (Partido Liberal Radical — PLR), in exile. 
In return for Renovationist participation in the elections of 1963, 
Stroessner allotted the new party twenty of Congress's sixty seats. 
Four years later, PLR members also returned to Paraguay and 
began participating in the electoral process. By this time, the 
Febreristas, a sad remnant of the once powerful but never terribly 
coherent revolutionary coalition, posed no threat to Stroessner and 
were legalized in 1964. The new Christian Democratic Party (Par- 
tido Democrata Cristiano — PDC) also renounced violence as a 
means of gaining power. The exhaustion of most opposition forces 
enabled Stroessner to crush the Paraguayan Communist Party (Par- 
tido Comunista Paraguayo — PCP) by mercilessly persecuting its 
members and their spouses and to isolate the exiled Colorado 
epifanistas (followers of Epifanio Mendez Fleitas) and democrdticos, 
who had reorganized themselves as the Colorado Popular Move- 
ment (Movimiento Popular Colorado — Mopoco). 

Under "liberalization," Ynsfran, the master of the machinery 
of terror, began to outlive his usefulness to Stroessner. Ynsfran 
opposed political decompression and was unhappy about Stroess- 
ner's increasingly clear intention to stay president for life. A May 
1966 police corruption scandal gave Stroessner a convenient way 
to dismiss Ynsfran in November. In August 1967, a new Consti- 
tution created a two-house legislature and formally allowed Stroess- 
ner to serve for two more five-year presidential terms (see 
Constitutional Development, ch. 4). 

International Factors and the Economy 

During the 1960s and 1970s, the main foreign influences on 
Paraguay were Brazil and the United States. Both countries aided 
Paraguay's economic development in ways that enhanced its 
political stability. A 1956 agreement with Brazil to improve the 
transport link between the two countries by building roads and a 



44 



Historical Setting 



bridge over the Rio Parana broke Paraguay's traditional depen- 
dence on Argentine goodwill for the smooth flow of Paraguayan 
international trade. Brazil's grant of duty-free port facilities on the 
Atlantic Coast was particularly valuable to Paraguay. 

Brazil's financing of the US$19 billion Itaipu Dam on the Rio 
Parana between Paraguay and Brazil had far-reaching consequences 
for Paraguay. Paraguay had no means of contributing financially 
to the construction, but its cooperation — including controversial 
concessions regarding ownership of the construction site and the 
rates for which Paraguay agreed to sell its share of the electricity — 
was essential. Itaipu gave Paraguay's economy a great new source 
of wealth. The construction produced a tremendous economic 
boom, as thousands of Paraguayans who had never before held 
a regular job went to work on the enormous dam. From 1973 (when 
construction began) until 1982 (when it ended), gross domestic 
product (GDP — see Glossary) grew more than 8 percent annually, 
double the rate for the previous decade and higher than growth 
rates in most other Latin American countries. Foreign exchange 
earnings from electricity sales to Brazil soared, and the newly 
employed Paraguayan workforce stimulated domestic demand, 
bringing about a rapid expansion in the agricultural sector (see 
Growth and Structure of the Economy, ch. 3). 

There were, however, several drawbacks to the construction at 
Itaipu. The prosperity associated with the major boom raised 
expectations for long-term growth. An economic downturn in the 
early 1980s caused discontent, which in turn led to demands for 
reform. Many Paraguayans, no longer content to eke out a living 
on a few hectares, had to leave the country to look for work. In 
the early 1980s, some observers estimated that up to 60 percent 
of Paraguayans were living outside the country. But even those 
people who were willing to farm a small patch of ground faced a 
new threat. Itaipu had prompted a tidal wave of Brazilian migra- 
tion in the eastern border region of Paraguay. By the mid-1980s, 
observers estimated there were between 300,000 and 350,000 
Brazilians in the eastern border region. With Portuguese the 
dominant language in the areas of heavy Brazilian migration and 
Brazilian currency circulating as legal tender, the area became 
closely integrated with Brazil (see Immigrants, ch. 2). Further, most 
of Paraguay's increased wealth wound up in the hands of wealthy 
supporters of the regime. Landowners faced no meaningful land 
reform, the regime's control of labor organizers aided business- 
men, foreign investors benefited from tax exemptions, and foreign 
creditors experienced a bonanza from heavy Paraguayan borrow- 
ing. Although the poorest Paraguayans were somewhat better off 



45 



Paraguay: A Country Study 

in 1982 than they were in the 1960s, they were worse off relative 
to other sectors of the population. 

Closer relations with Brazil paralleled a decline in relations with 
Argentina. After Peron's expulsion, Paraguay slipped from the orbit 
of Buenos Aires as Argentina declined politically and economically. 
Argentina, alarmed by Itaipu and close cooperation between Brazil 
and Paraguay, pressed Stroessner to agree to participate in hydro- 
electric projects at Yacyreta and Corpus (see Electricity, ch. 3). 
By pitting Argentina against Brazil, Stroessner improved Para- 
guay's diplomatic and economic autonomy and its economic 
prospects. 

Stroessner also benefited from the 1950s and 1960s Cold War 
ideology in the United States, which favored authoritarian, anticom- 
munist regimes. Upon reaching Asuncion during his 1958 tour of 
Latin America, Vice President Richard M. Nixon praised Stroess- 
ner' s Paraguay for opposing communism more strongly than any 
other nation in the world. The main strategic concern of the United 
States at that time was to avoid at all costs the emergence in 
Paraguay of a left-wing regime, which would be ideally situated 
at the heart of the South American continent to provide a haven 
for radicals and a base for revolutionary activities around the 
hemisphere. From 1947 until 1977, the United States supplied about 
US$750,000 worth of military hardware each year and trained more 
than 2,000 Paraguayan military officers in counterintelligence and 
counterinsurgency. In 1977 the United States Congress sharply cut 
military assistance to Paraguay. 

Paraguay regularly voted in favor of United States policies in 
the United Nations (UN) and the Organization of American States 
(OAS). Stroessner, probably the United States' most dependable 
ally in Latin America, once remarked that the United States 
ambassador was like an extra member of his cabinet. Relations 
faltered somewhat during the administration of President John F. 
Kennedy, as United States officials began calling for democracy 
and land reform and threatened to withhold Alliance for Progress 
funds (an amount equal to about 40 percent of Paraguay's bud- 
get) unless Paraguay made progress. Although pressure of this sort 
no doubt encouraged Stroessner to legalize some internal opposi- 
tion parties, it failed to make the Paraguayan ruler become any 
less a personalist dictator. Regime opponents who agreed to play 
Stroessner' s electoral charade received rewards of privileges and 
official recognition. Other opponents, however, faced detention and 
exile. Influenced by Paraguay's support for the United States 
intervention in the Dominican Republic in 1965, the United States 



46 



The National Pantheon of Heroes, Asuncion 
Courtesy United States Department of State 

became friendlier to Stroessner in the mid-1960s under President 
Lyndon B. Johnson. New United States- supported military govern- 
ments in Brazil and Argentina also improved United States- 
Paraguay ties. 

Relations between Paraguay and the United States changed sub- 
stantially after the election of President Jimmy Carter in 1976. The 
appointment of Robert White as United States ambassador in 1977 
and the congressional cut-off of military hardware deliveries in the 
same year reflected increasing concern about the absence of 
democracy and the presence of human rights violations in Paraguay 
(see Relations with the United States, ch. 4). 

Toward the 1980s 

After a period of inactivity, the political opposition became 
increasingly visible in the late 1970s. In 1977 Domingo Lamo, a 
PLR congressman during the previous ten years, broke away to 
form the Authentic Radical Liberal Party (Partido Liberal Radi- 
cal Autentico — PLRA). Lamo's charges of government corruption, 
involvement in narcotics trafficking, human rights violations, and 
inadequate financial compensation from Brazil under the terms 
of the Treaty of Itaipu earned him Stroessner's wrath. In 1979 
Lamo helped lead the PLRA, the PDC, Mopoco, and the legally 
recognized Febreristas — the latter angered by the constitutional 



47 



Paraguay: A Country Study 

amendment allowing Stroessner to seek yet another presidential 
term in 1978 — into the National Accord (Acuerdo Nacional). The 
National Accord served to coordinate the opposition's political 
strategy (see Opposition Parties, ch. 4). The victim of count- 
less detentions, torture, and persecution, Laino was forced into 
exile in 1982 following the publication of a critical book about 
ex-Nicaraguan dictator Anastasio Somoza Debayle, who was 
assassinated in Asuncion in 1980. 

Beginning in the late 1960s, the Roman Catholic Church per- 
sistently criticized Stroessner' s successive extensions of his stay in 
office and his treatment of political prisoners. The regime responded 
by closing Roman Catholic publications and newspapers, expel- 
ling non-Paraguayan priests, and harassing the church's attempts 
to organize the rural poor (see Interest Groups, ch. 4). 

The regime also increasingly came under international fire in 
the 1970s for human rights abuses, including allegations of tor- 
ture and murder. In 1978 the Inter- American Commission on 
Human Rights convinced an annual meeting of foreign ministers 
at the OAS to pass a resolution calling on Paraguay to improve 
its human rights situation. In 1980 the Ninth OAS General 
Assembly, meeting in La Paz, Bolivia, condemned human rights 
violations in Paraguay, describing torture and disappearances as 
"an affront to the hemisphere's conscience." International groups 
also charged that the military had killed 30 peasants and arrested 
300 others after the peasants had protested against encroachments 
on their land by government officials. 

Paraguay entered the 1980s less isolated, rural, and backward 
than it had traditionally been. Political and social structures 
remained inflexible, but Paraguayans had changed their world 
views and their perceptions of themselves. 

By skillfully balancing the military and the Colorado Party, 
Stroessner remained very much in control. Still, he was increas- 
ingly being challenged in ways that showed that his control was 
not complete. For example, in November 1974, police units 
captured seven guerrillas in a farmhouse outside of Asuncion. When 
the prisoners were interrogated, it became clear that the infor- 
mation possessed by the guerrillas, who had planned to assassinate 
Stroessner, could have come only from a high Colorado official. 
With the party hierarchy suddenly under suspicion, Stroessner 
ordered the arrest and interrogation of over 1,000 senior officials 
and party members. He also dispatched agents to Argentina and 
Brazil to kidnap suspects among the exiled Colorados. A mas- 
sive purge of the party followed. Although the system survived, 
it was shaken. 



48 



Historical Setting 



Perhaps the clearest example of cracks in Stroessner's regime 
was the assassination of Somoza. From Stroessner's standpoint, 
there were ominous similarities between Somoza and himself. Like 
Stroessner, Somoza had run a regime based on the military and 
a political party that had been noted for its stability and its appar- 
ent imperviousness to change. Somoza also had brought economic 
progress to the country and had skillfully kept his internal opposi- 
tion divided for years. Ultimately, however, the carefully controlled 
changes he had introduced began subtly to undermine the tradi- 
tional, authoritarian order. As traditional society broke down in 
Paraguay, observers saw increasing challenges ahead for the Stroess- 
ner regime. 

* * * 

There are many excellent works in English on Paraguayan his- 
tory. Two enjoyable accounts are George Pendle's concise over- 
view Paraguay: A Riverside Nation and Harris Gaylord Warren's more 
detailed Paraguay: An Informal History. Philip Caraman's The Lost 
Paradise and R.B. Cunninghame Graham's^ Vanished Arcadia offer 
valuable information about the colonial period, especially the Jesuit 
reducciones. Another valuable book is Paul H. Lewis's Socialism, Liber- 
alism, and Dictatorship in Paraguay. The standard work up to 1870 
remains Charles A. Washburn's The History of Paraguay. 

John Hoyt Williams's The Rise and Fall of the Paraguayan Repub- 
lic, 1800-1870 provides a comprehensive look at independence and 
the Francia and Lopez dictatorships. The War of the Triple Alli- 
ance is scrutinized in Pelham Horton Box's The Origins of the 
Paraguayan War. Readers interested in the postwar period may refer 
to Harris Gaylord Warren's Rebirth of the Paraguayan Republic, 
1878-1904. David H. Zook, Jr.' s The Conduct of the Chaco War focuses 
on the 1932-35 war with Bolivia. Paul H. Lewis's The Politics of 
Exile: Paraguay's Febrerista Party examines the 1936-40 revolution 
and the Febreristas, and Michael Grow amply treats Mormigo and 
World War II in The Good Neighbor Policy and Authoritarianism in 
Paraguay. No full-length biography of Alfredo Stroessner exists; 
however, Richard Bourne's Political Leaders of Latin America con- 
tains an insightful chapter on him. (For further information and 
complete citations, see Bibliography.) 



49 



Chapter 2. The Society and Its Environment 




Traditional bottle dance 



FOR MOST OF ITS HISTORY, a series of dichotomies charac- 
terized Paraguayan society. A contrast existed between rural and 
urban Paraguay and, even more pointedly, between Asuncion — 
where economic, social, and political trends originated — and the 
rest of Paraguay. In rural Paraguay a divide existed between those 
holding legal title to land, usually the owners of large estates dedi- 
cated to commercial farming, and the mass of peasant squatters 
growing crops largely for their families' subsistence. Similarly, there 
was a gulf between the elite — educated, prosperous, city-based and 
-bred — and the country's poor, whether rural or urban. Finally, 
although most Paraguayans retained their fluency in Guarani and 
this indigenous language continued to play a vital role in public 
life, there was a continuum of fluency in Spanish that paralleled 
(and reflected) the social hierarchy. These dichotomies not only 
continued into the 1980s but were exacerbated by the extensive, 
dramatic changes that had occurred in Paraguayan society since 
the 1960s. 

Paraguayans of all classes viewed family and kin as the center 
of the social universe. Anyone not related through blood or mar- 
riage was regarded with reserve, if not distrust. People expected 
to be able to call upon extended kin for assistance as necessary and 
counted on them for unswerving loyalty. Godparents (whether or 
not they were kin) were important as well in strengthening social 
links within the web of kinship. 

Migration was a perennial fact of life: peasants changed plots; 
men worked on plantations, factories, and river boats; women 
migrated to cities and towns to find employment in domestic service. 
Since the mid-nineteenth century, there also had been a large con- 
tingent of emigre Paraguayans in Argentina. 

In the early 1970s, Paraguay's eastern border region — long 
underpopulated and undeveloped — replaced neighboring Argen- 
tina as the major destination of most Paraguayan migrants. Histor- 
ically, land in the region had been held in immense plantations; 
the inhabitants were largely tropical forest Indians and mestizo 
peasant squatters. Beginning in the late 1960s, however, govern- 
ment land reform projects settled as many as 250,000 rural Para- 
guayans in agricultural colonies in this area. Many others bypassed 
the government entirely and settled in the region on their own. 

Improvements in transportation and the construction of mas- 
sive hydroelectric projects brought more far-reaching changes in 



53 



Paraguay: A Country Study 

the 1970s and 1980s. Economic growth drew tens of thousands 
of migrants — immigrants from neighboring Brazil as well as 
Paraguayan nationals — into the eastern border region. Their sheer 
numbers transformed the east from a sleepy hinterland into a mael- 
strom of change. In the process, both Indians and traditional small 
farmers were dispossessed of their lands and their traditional liveli- 
hood. As the construction projects were completed in the early 
1980s, the region saw increased rural unrest as the peasants who 
had temporarily held jobs in construction found that there were 
no unclaimed agricultural lands for them to occupy. 

The pace of urbanization — modest by world and Latin Ameri- 
can standards — quickened during the boom years. Economic 
growth enabled the cities to absorb large numbers of rural 
Paraguayans who had been displaced by increased population pres- 
sures and the country's skewed land distribution. Economic down- 
turns in the 1980s, however, stoked unrest among workers and 
peasants. 

Geography 

Although landlocked, Paraguay is bordered and criss-crossed by 
navigable rivers. The Rio Paraguay divides the country into strik- 
ingly different eastern and western regions. Both the eastern 
region — officially called Eastern Paraguay (Paraguay Oriental) and 
known as the Paranena region — and the western region — officially 
Western Paraguay (Paraguay Occidental) and known as the 
Chaco — gendy slope toward and are drained into the Rio Paraguay, 
which thus not only separates the two regions but unifies them. 
With the Paranena region reaching southward and the Chaco 
extending to the north, Paraguay straddles the Tropic of Capricorn 
and experiences both subtropical and tropical climates. 

External Boundaries 

Paraguay is bounded by three substantially larger countries: 
Bolivia, Argentina, and Brazil (see fig. 1). The northwestern bound- 
ary with Bolivia, extending through the low hills of the Chaco 
region, was set in 1938. The boundary between the Chaco and 
Brazil was defined in 1927; it continues from the confluence of the 
Rio Apa and Rio Paraguay northward along the course of the Rio 
Paraguay to the border with Bolivia. The northern border of the 
Paranena region, set in 1872, follows the course of the Rio Parana, 
the ridges of the mountains in the northeast region, and finally the 
course of the Rio Apa until it empties into the Rio Paraguay. 
Paraguay's southern border with Argentina is formed by the 



54 



The Society and Its Environment 



Rio Pilcomayo, Rio Paraguay, and Rio Parana. These boundaries 
were agreed to in 1876. 

Natural Regions 

The two main natural regions in Paraguay are the Paranena 
region — a mixture of plateaus, rolling hills, and valleys — and the 
Chaco region — an immense piedmont plain. About 95 percent of 
Paraguay's population resides in the Paranena region, which has 
all the significant orographic features and the more predictable cli- 
mate. The Paranena region can be generally described as consist- 
ing of an area of highlands in the east that slopes toward the Rio 
Paraguay and becomes an area of lowlands, subject to floods, along 
the river. The Chaco is predominantly lowlands, also inclined 
toward the Rio Paraguay, that are alternately flooded and parched 
(see fig. 3). 

The Paranena Region 

The Paranena region extends from the Rio Paraguay eastward 
to the Rio Parana, which forms the border with Brazil and 
Argentina. The eastern hills and mountains, an extension of a 
plateau in southern Brazil, dominate the region, whose highest point 
is about 700 meters above sea level. The Paranena region also has 
spacious plains, broad valleys, and lowlands. About 80 percent of 
the region is below 300 meters in elevation; the lowest elevation, 
55 meters, is found in the extreme south at the confluence of the 
Rio Paraguay and Rio Parana. 

The Paranena region is drained primarily by rivers that flow 
westward to the Rio Paraguay, although some rivers flow eastward 
to the Rio Parana. Low-lying meadows, subject to floods, separate 
the eastern mountains from the Rio Paraguay. 

The Paranena region as a whole naturally divides into five phys- 
iographic subregions: the Parana Plateau, the Northern Upland, 
the Central Hill Belt, the Central Lowland, and the Neembucu 
Plain. In the east, the heavily wooded Parana Plateau occupies one- 
third of the region and extends its full length from north to south 
and up to 145 kilometers westward from the Brazilian and Argen- 
tine borders. The Parana Plateau's western edge is defined 
by an escarpment that descends from an elevation of about 460 
meters in the north to about 180 meters at the subregion's south- 
ern extremity. The plateau slopes moderately to east and south, 
its remarkably uniform surface interrupted only by the nar- 
row valleys carved by the westward-flowing tributaries of the Rio 
Parana. 



55 



Paraguay: A Country Study 




Figure 3. Topography and Drainage 

The Northern Upland, the Central Hill Belt, and the Central 
Lowland constitute the lower terrain lying between the escarpment 
and the Rio Paraguay. The first of these eroded extensions stretch- 
ing westward of the Parana Plateau— the Northern Upland- 
occupies the portion northward from the Rio Aquidaban to the Rio 
Apa on the Brazilian border. For the most part it consists of a 
rolling plateau about 180 meters above sea level and 76 to 90 



56 



The Society and Its Environment 



meters above the plain farther to the south. The Central Hill Belt 
encompasses the area in the vicinity of Asuncion. Although 
nearly flat surfaces are not lacking in this subregion, the rolling 
terrain is extremely uneven. Small, isolated peaks are numerous, 
and it is here that the only lakes of any size are found. Between 
these two upland subregions is the Central Lowland, an area of 
low elevation and relief, sloping gently upward from the Rio 
Paraguay toward the Parana Plateau. The valleys of the Central 
Lowland's westward-flowing rivers are broad and shallow, and peri- 
odic flooding of their courses creates seasonal swamps. This 
subregion' s most conspicuous features are its flat- topped hills, which 
project six to nine meters from the grassy plain. Thickly forested, 
these hills cover areas ranging from a hectare to several square 
kilometers. Apparently the weathered remnants of rock related to 
geological formations farther to the east, these hills are called islas 
de monte (mountain islands), and their margins are known as costas 
(coasts). 

The remaining subregion — the Neembucu Plain — is in the south- 
west corner of the Paranefia region. This alluvial flatland has a 
slight westerly- southwesterly slope obscured by gentle undulations. 
The Rio Tebicuary — a major tributary of the Rio Paraguay — 
bisects the swampy lowland, which is broken in its central portion 
by rounded swells of land up to three meters in height. 

The main orographic features of the Paranefia region include 
the Cordillera de Amambay, the Cordillera de Mbaracayu, and 
the Cordillera de Caaguazu. The Cordillera de Amambay extends 
from the northeast corner of the region south and slightiy east along 
the Brazilian border. The average height of the mountains is 400 
meters above sea level, although the highest point reaches 700 
meters. The main chain is 200 kilometers long and has smaller 
branches that extend to the west and die out along the banks of 
the Rio Paraguay in the Northern Upland. 

The Cordillera de Amambay merges with the Cordillera de 
Mbaracayu, which reaches eastward 120 kilometers to the Rio 
Parana. The average height of this mountain chain is 200 meters; 
the highest point of the chain, 500 meters, is within Brazilian ter- 
ritory. The Rio Parana forms the Salto del Guaira waterfall where 
it cuts through the mountains of the Cordillera de Mbaracayu to 
enter Paraguayan territory. 

The Cordillera de Caaguazu rises where the other two main 
mountain ranges meet and extends south, with an average height 
of 400 meters. Its highest point is Cerro de San Joaquin, which 
reaches 500 meters above sea level. This chain is not a continuous 
massif but is interrupted by hills and undulations covered with 



57 



Paraguay: A Country Study 

forests and meadows. The Cordillera de Caaguazu reaches west- 
ward from the Parana Plateau into the Central Hill Belt. 

A lesser mountain chain, the Serrania de Mbaracayu, also rises 
at the point where the Cordillera de Amambay and Cordillera de 
Mbaracayu meet. The Serrania de Mbaracayu extends east and 
then south to parallel the Rio Parana; the mountain chain has an 
average height of 500 meters. 

The Chaco Region 

Separated from the Paranena region by the Rio Paraguay, the 
Chaco region is a vast plain with elevations reaching no higher than 
300 meters and averaging 125 meters. Covering more than 60 per- 
cent of Paraguay's total land area, the Chaco plain gently slopes 
eastward to the Rio Paraguay. The Gran Chaco, the entire western 
portion of the region, is subdivided into the Alto Chaco (Upper 
Chaco), bordering on Bolivia, and the Bajo Chaco (Lower Chaco), 
bordering on the Rio Paraguay. The low hills in the northwestern 
part of the Alto Chaco are the highest parts in the Gran Chaco. 
The main feature of the Bajo Chaco is the Estero Patifio, the lar- 
gest swamp in the country at 1,500 square kilometers. 

Drainage 

Rivers have greatly influenced the character of the country. The 
Rio Paraguay and Rio Parana and their tributaries define most 
of the country's borders, provide all its drainage, and serve as trans- 
portation routes. Most of the larger towns of the interior, as well 
as Asuncion, are river ports. 

The Rio Paraguay has a total course of 2,600 kilometers, 2,300 
of which are navigable and 1 ,200 of which either border on or pass 
through Paraguay. The head of navigation is located in Brazil, and 
during most years vessels with twenty-one-meter drafts can reach 
Concepcion without difficulty. Medium-sized ocean vessels can 
sometimes reach Asuncion, but the twisting course and shifting 
sandbars can make this transit difficult. Although sluggish and shal- 
low, the river sometimes overflows its low banks, forming temporary 
swamps and flooding villages. River islands, meander scars, and 
oxbow (U-shaped) lakes attest to frequent changes in course. 

The major tributaries entering the Rio Paraguay from the 
Paranena region — such as the Rio Apa, Rio Aquidaban, and Rio 
Tebicuary — descend rapidly from their sources in the Parana 
Plateau to the lower lands; there they broaden and become slug- 
gish as they meander westward. After heavy rains these rivers some- 
times inundate nearby lowlands. 



58 



The Society and Its Environment 



About 4,700 kilometers long, the Rio Parana is the second major 
river in the country. From Salto del Guaira, where the river enters 
Paraguay, the Rio Parana flows 800 kilometers to its juncture with 
the Rio Paraguay and then continues southward to the Rio de la 
Plata Estuary at Buenos Aires, Argentina. In general, the Rio 
Parana is navigable by large ships only up to Encarnacion, but 
smaller boats may go somewhat farther. In summer months the 
river is deep enough to permit vessels with drafts of up to three 
meters to reach Salto del Guaira, but seasonal and other occasional 
conditions severely limit the river's navigational value. On the upper 
course, sudden floods may raise the water level by as much as five 
meters in twenty-four hours; west of Encarnacion, however, the 
rocks of the riverbed sometimes come within one meter of the sur- 
face during winter and effectively sever communication between 
the upper river and Buenos Aires. 

The rivers flowing eastward across the Paranena region as tribu- 
taries of the Rio Parana are shorter, faster- flowing, and narrower 
than the tributaries of the Rio Paraguay. Sixteen of these rivers 
and numerous smaller streams enter the Rio Parana above 
Encarnacion. 

Paraguay's third largest river, the Rio Pilcomayo, flows into the 
Rio Paraguay near Asuncion after demarcating the entire border 
between the Chaco region and Argentina. During most of its course, 
the river is sluggish and marshy, although small craft can navigate 
its lower reaches. When the Rio Pilcomayo overflows its low banks, 
it feeds the Estero Patino. 

Drainage in the Chaco region is generally poor because of the 
flatness of the land and the small number of important streams. 
In many parts of the region, the water table is only a meter beneath 
the surface of the ground, and there are numerous small ponds 
and seasonal marshes. As a consequence of the poor drainage, most 
of the water is too salty for drinking or irrigation. 

Because of the seasonal overflow of the numerous westward-flow- 
ing streams, the lowland areas of the Paranena region also ex- 
perience poor drainage conditions, particularly in the Neembucu 
Plain in the southwest, where an almost impervious clay subsur- 
face prevents the absorption of excess surface water into the aquifer. 
About 30 percent of the Paranena region is flooded from time to 
time, creating extensive areas of seasonal marshlands. Permanent 
bogs are found only near the largest geographic depressions, however. 

Climate 

Paraguay experiences a subtropical climate in the Paranena 
region and a tropical climate in the Chaco. The Paranena region 



59 



Paraguay: A Country Study 

is humid, with abundant precipitation throughout the year and only 
moderate seasonal changes in temperature. During the Southern 
Hemisphere's summer, which corresponds to the northern winter, 
the dominant influence on the climate is the warm sirocco winds 
blowing out of the northeast. During the winter, the dominant wind 
is the cold pampero from the South Atlantic, which blows across 
Argentina and is deflected northeastward by the Andes in the 
southern part of that country. Because of the lack of topographic 
barriers within Paraguay, these opposite prevailing winds bring 
about abrupt and irregular changes in the usually moderate weather. 
Winds are generally brisk. Velocities of 160 kilometers per hour 
have been reported in southern locations, and the town of Encar- 
nacion was once leveled by a tornado. 

The Paranena region has only two distinct seasons: summer from 
October to March and winter from May to August. April and Sep- 
tember are transitional months in which temperatures are below 
the midsummer averages and minimums may dip below freezing. 
Climatically, autumn and spring do not really exist. During the 
mild winters, July is the coldest month, with a mean temperature 
of about 18°C in Asuncion and 17°C on the Parana Plateau. There 
is no significant north-south variation. The number of days with 
temperatures falling below freezing ranges from as few as three 
to as many as sixteen yearly, and with even wider variations deep 
in the interior. Some winters are very mild, with winds blowing 
constantly from the north, and little frost. During a cold winter, 
however, tongues of Antarctic air bring subfreezing temperatures 
to all areas. No part of the Paranena region is entirely free from 
the possibility of frost and consequent damage to crops, and snow 
flurries have been reported in various locations. 

Moist tropical air keeps the weather warm in the Paranena region 
from October through March. In Asuncion the seasonal average 
is about 24°C, with January — the warmest month — averaging 
29°C. Villarrica has a seasonal mean temperature of 21°C and 
a January mean of 27°C. During the summer, daytime tempera- 
tures reaching 38°C are fairly common. Frequent waves of cool 
air from the south, however, cause weather that alternates between 
clear, humid conditions and storms. Skies will be almost cloudless 
for a week to ten days as temperature and humidity rise continu- 
ally. As the soggy heat nears intolerable limits, thunderstorms 
preceding a cold front will blow in from the south, and tempera- 
tures will drop as much as 15°C in a few minutes. 

Rainfall in the Paranena region is fairly evenly distributed. 
Although local meteorological conditions play a contributing role, 
rain usually falls when tropical air masses are dominant. The least 



60 



The Society and Its Environment 



rain falls in August, when averages in various parts of the region 
range from two to ten centimeters. The two periods of maximum 
precipitation are March through May and October to November. 

For the region as a whole, the difference between the driest and 
the wettest months ranges from ten to eighteen centimeters. The 
annual average rainfall is 127 centimeters, although the average 
on the Parana Plateau is 25 to 38 centimeters greater. All subregions 
may experience considerable variations from year to year. Asun- 
cion has recorded as much as 208 centimeters and as little as 56 
centimeters of annual rainfall; Puerto Bertoni on the Parana Plateau 
has recorded as much as 330 centimeters and as little as 79 cen- 
timeters. 

In contrast to the Paranena region, the Chaco has a tropical wet- 
and-dry climate bordering on semi-arid. The Chaco experiences 
seasons that alternately flood and parch the land, yet seasonal var- 
iations in temperature are modest. Chaco temperatures are usually 
high, the averages dropping only slightly in winter. Even at night 
the air is stifling despite the usually present breezes. Rainfall is 
light, varying from 50 to 100 centimeters per year, except in the 
higher land to the northwest where it is somewhat greater. Rain- 
fall is concentrated in the summer months, and extensive areas that 
are deserts in winter become summer swamps. Rainwater 
evaporates very rapidly. 

Population 

The 1982 census enumerated a population of slightly more than 
3 million. Demographers suggested annual growth rates from 2.5 
to 2.9 percent in the late 1980s. Thus, in mid- 1988, estimates of 
total population ranged from 4 to 4.4 million. Assuming a yearly 
increase of between 2.5 and 2.9 percent until the end of the century, 
Paraguay would have a population of 5 to 6 million by the year 
2000. 

Modern censuses began under the direction of the General Office 
of Statistics following the War of the Triple Alliance (1865-70). 
In 1886-87 the census enumerated nearly 330,000 Paraguayans. 
Beginning with the 1950 census, population counts have been con- 
ducted by the General Directorate of Statistics and Census. Cen- 
suses were taken in 1886-87, 1889, 1914, 1924, 1936, 1950, 1962, 
1972, and 1982. Demographers distrust the 1889 data since the 
numbers do not follow the generally accepted population growth 
curve. 

After moderate growth in the 1930s and 1940s, the annual 
intercensal growth rate climbed sharply in the 1950s and 1960s (see 
table 2, Appendix). Population was concentrated most densely in 



61 



Paraguay: A Country Study 




25 50 100 Kilometers 



25 50 100 Miles 



Source: Based on information from Paraguay, Direction General de Estadfstica y Censos, 
Censo national de poblacion y viviendas, 1982: Cifras provisionales, Asuncion, December 
1982, 4. 

Figure 4. Population Density by Department, 1982 

an arc surrounding Asuncion east of the Rio Paraguay (see 
fig. 4). The Chaco was the least settled area; the region lost 
population in the 1970s at an annual rate nearly equal to the 
national rate of population increase during the same period — a trend 
that observers believed continued into the 1980s. Settlement along 
the country's eastern border increased significantly with improve- 
ments in transportation and the construction of hydroelectric 
projects in the region (see Migration and Urbanization, this ch.). 

Since the 1950s, the ratio of males to females had increased 
steadily — an unexpected trend. As a population's general level of 



62 



The Society and Its Environment 



living, basic nutrition, and sanitation improve, the proportion of 
women to men typically tends to rise as degenerative diseases take 
a greater toll on the male population and women's longevity begins 
to have a discernible statistical impact. Observers suggested that a 
partial explanation of Paraguay's unusual pattern might be the 
decreasing effect of the male emigration that occurred during the 
decade following the civil war of 1947. The ratio of males to each 
100 females was highest in rural areas (107) and lowest in cities (94), 
reflecting a greater tendency of women to migrate to urban areas. 

The 1982 census also revealed a slightly aging population. In 
1982 nearly 5 percent of Paraguayans were over sixty-five years 
old, in contrast to 4 percent for this age- group a decade earlier. 
Meanwhile, the percentage under age fifteen had dropped 3 per- 
cent, to 41.8 percent (see fig. 5). 

The average age at which Paraguayan women entered their first 
marriage or consensual union began to rise in the 1950s. By the 
late 1970s, women in Asuncion averaged 19.7 years of age at their 
first marriage; those in other cities were about 8 months younger, 
and those in rural areas were a year younger. The Ministry of Public 
Health and Social Welfare cooperated in the family-planning efforts 
of a number of international agencies active in the country and 
managed several family-planning clinics in Asuncion and other parts 
of the country. Between 1959 and 1978, the total fertility rate — an 
estimate of the average number of children a woman will bear dur- 
ing her reproductive years — declined by nearly one-third, to 4.97. 
Estimates put the rate at 4.6 in the mid-1980s, with 3.4 projected 
by the turn of the century. 

Social Relations 

Colonial Paraguay (basically, what is now Eastern Paraguay) 
lacked productive mines, strategic seaports, or lucrative plantation 
agriculture. Through most of the colonial era, it languished as a 
backwater of the Spanish Empire in the Americas, a region of small 
estates with a minimal number of Spanish settlers. The Guaranf- 
speaking Indians of the region were drawn into colonial society prin- 
cipally through high rates of intermarriage and concubinage with 
Spanish settlers, a process that created a mestizo society within a 
few generations (see The Young Colony, ch. 1). In the resulting 
cultural synthesis, the dominant language remained Guaranf, 
whereas the rest of the dominant social institutions and culture 
remained Hispanic. 

The few remaining Hispanic overlords were largely eliminated 
in the upheaval of the War of the Triple Alliance, leaving a 
homogeneous population of mestizo farmers. Despite far-reaching 



63 



Paraguay: A Country Study 



AGE-GROUP 























?U an U UVCI 






















85-89 






















80-84 






















75-79 




MALES 






FEMALES 




70-74 












"1 










65-69 




















60-64 






















55-59 










I " 












50-54 






















45-49 






















40-44 


















35-39 


















30-34 










i 








25-29 






m 










20-24 








s 






15-19 














10-14 
















5-9 


1 














0-4 




1 



250 200 150 100 50 50 100 150 200 250 



POPULATION IN THOUSANDS 



Source: Based on information from Paraguay, Direction General de Estadistica y Censos, 
Censo national de poblaciony viviendas, 1982: Muestra del 10% , Asuncion, September 
1984, 20. 

Figure 5. Population by Age and Sex, 1982 

changes from the 1960s to the 1980s, Paraguay remained a coun- 
try of peasants engaged in subsistence farming. The basic social 
dichotomy was between small farmers and a narrow stratum of elite 
families whose diverse resources included links to industry, com- 
merce, government, the military, and commercial agriculture. The 
upper class was centered in the capital and was interlinked by ties 
of kinship and marriage. Many, if not most, members of the elite 
knew each other from childhood, having grown up in the same 
neighborhoods and attended the same schools. 

Guar am — which, unlike many indigenous New World languages, 
included a written form after the Jesuits developed an orthography 
in the mid- sixteenth century — remained a vital element of Para- 
guayan national identity. Guaram had always been one of the prin- 
cipal ways Paraguayans distinguished themselves from the rest of 
Latin America, and the 1967 Constitution recognizes Guaram as 
a national language. Guaram theater, in which both Paraguayan 
works and translations of European classics were performed, was 
popular with all levels of society. Paraguayan songs were interna- 
tionally popular; lyrics in Spanish and Guaram were a hallmark 
of Paraguayan culture. 



64 



The Society and Its Environment 



Sociolinguist Joan Rubin characterized Paraguay as "... a 
Guaram- speaking nation with a heavy incidence of Spanish-Guaram 
bilingualism in which each language tends to fulfill distinct func- 
tions." Spanish had been the official language since the sixteenth 
century, and in the late twentieth century it remained the language 
of government, education, and religion. Nevertheless, Paraguayans 
of all classes spoke Guaram much of the time. Language use varied 
by social context, however. Guaram was appropriate in more 
intimate contexts. Spanish was used in more formal situations; it 
implied respect toward one of higher status. In families, for exam- 
ple, parents might use Guaram in speaking to one another and 
require that their children speak to them in Spanish. The upper 
echelons were distinguished by their relative fluency and ease in 
using Spanish. By contrast, most rural Paraguayans were mono- 
lingual Guaram speakers until as late as the 1960s. 

Family and Kin 

For Paraguayans of all social strata and backgrounds, family and 
kin were the primary focus of an individual's loyalties and identity. 
In varying degrees of closeness, depending on individual circum- 
stances and social class, the family included godchildren, godpar- 
ents, and many members of the extended family. Paraguayans felt 
some reserve toward anyone not able to claim relationship through 
kinship or marriage. Family and kin — not the community — were 
the center of the social universe. An individual could expect 
assistance from extended kin on an ad hoc basis in times of need. 
Poorer Paraguayans relied particularly on their mother's relatives; 
the more prosperous were more even-handed in their dealings with 
extended kin. The country's elite buttressed its economic advan- 
tages through a web of far-reaching kinship ties. The truly elite 
family counted among its kindred large landholders, merchants, 
intellectuals, and military officers. Political allegiances also reflected 
family loyalties; all available kin were marshalled in support of the 
individual's political efforts. 

Nonetheless, most people lived in nuclear families consisting of 
spouses and their unmarried offspring. Most families consisted of 
a couple and their pre-adult children or a single mother and her 
children. Individual adults living alone were rare. If a marriage 
broke up, the mother typically kept the children and home, whereas 
the father either formed another union or moved in with relatives 
until he did so. The most typical extension of the nuclear family 
was a form of "semi-adoption" in which well-to-do townspeople 
took in a child of poorer rural relatives or adopted (on a more 



65 



Paraguay: A Country Study 



permanent basis) the illegitimate offspring of a female relative. 
There were few intergenerational households. Adoption conformed 
to cultural norms favoring assistance to relatives, but intergenera- 
tional families were viewed as a source of conflict. This charac- 
terization also usually prevented a daughter and her children from 
moving back home following a divorce or separation. 

The nuclear family prevailed, in part, because of the limited eco- 
nomic opportunities available to most families. Few of the tradi- 
tional enterprises by which most Paraguayans earned a living could 
support more than the immediate family members. 

Surveys in the late 1970s and early 1980s found that nearly 20 
percent of all households were headed by a single parent — usually 
the mother. The incidence was highest in cities outside of Greater 
Asuncion and lowest in rural areas. Households headed by a female 
generally were poor. Children's fathers might or might not acknowl- 
edge their offspring; in either event, admitting paternity did not 
obligate men to do much in the way of continued support for their 
children. Most single mothers worked in poorly paying jobs or a 
variety of cottage industries (see Rural Society, this ch.). In almost 
all cases, they were consigned to a sector of the economy where 
competition was intense and earnings low. 

Within two-parent families, the male was the formal head of the 
household. Fathers were treated with respect, but typically had little 
to do with the daily management of the home. Their contact with 
children, especially younger ones, was limited. Women maintained 
ties with extended kin, ran the home, and dealt with finances; they 
often contributed as well to the family's income. Men spent a good 
deal of time socializing outside the home. 

There were three kinds of marriage: church, civil, and consen- 
sual unions. Almost all adults married. Although stable unions were 
socially esteemed, men's extramarital affairs drew litde criticism 
as long as they did not impinge on the family's subsistence and 
continued well-being. By contrast, women's sexual behavior 
reflected on their families and affected family stability; women were 
expected to be faithful as long as they were involved in a reason- 
ably permanent union. A church wedding represented a major 
expense for the families involved. The common view held that a 
fiesta was an essential part of the ceremony and required that it 
be as large and costly as the two families could possibly afford. The 
celebrations attendant on a civil marriage or the formation of a 
consensual union were considerably less elaborate. Typically, the 
couple's families met for a small party and barbecue. Church wed- 
dings were rare among peasants — the expenses were simply beyond 



66 



Shoppers on a busy Asuncion street 
Courtesy Inter-American Development Bank 

the reach of the average farm family. Even a civil marriage was 
a mark of status among peasants. 

So-called illegitimacy was neither a stigma nor a particular dis- 
advantage if the child came from a stable consensual union and 
could assume the father's name. But children of upper-class males 
and lower-class women suffered because, although their fathers 
recognized them as offspring, they could not use the paternal family 



67 



Paraguay: A Country Study 



name, nor did they have a claim to the father's inheritance. Chil- 
dren whose fathers were not known or would not acknowledge them 
lost the most status. They were typically the offspring of single 
mothers who themselves were very poor. 

Reality was often at odds with the Paraguayan ideal of extended 
kinship ties. Because the poor migrated frequently and often had 
unstable marital unions, relatives typically were well-known only 
for a generation preceding and following a given individual. The 
wealthy were more adept at tracing lines of descent through several 
generations. This was a function of their greater marital stability 
and their vested interest in maintaining the links that tied them 
to potential inheritance. Relatives in prosperous families often were 
not as close as their less affluent counterparts, however, because 
the well-to-do relied less on relatives for mutual aid and were poten- 
tial competitors for inheritance. 

Ritual Kinship 

Ritual kinship in the form of godparenthood (compadrazgo) played 
an important role in strengthening and extending the ties of kin- 
ship, as it did in much of Latin America. Parents selected godpar- 
ents for a child at his or her baptism, confirmation, and marriage. 
The godparents were then tied to the parents as co-parents. Those 
chosen for the child's baptism were considered the most impor- 
tant, and great care was exercised in their selection. 

Ideally co-parents should be a married couple; they were pre- 
ferred because their unions were typically more stable and they 
were more likely to be able to provide a home for the child should 
the need arise. In most communities, however, there were not 
enough couples to serve as godparents for all children, so single 
women of good reputation were frequently chosen. It was impor- 
tant that the person asked should be of proper character and good 
standing in the community. 

Often parents asked a close, important relative to serve as god- 
parent. The tie between co-parents reinforced that of kinship. The 
same godparents could serve for the couple's successive children, 
a practice that further strengthened the ties between the families 
involved. 

A godparent was expected to see to his or her godchild's upbring- 
ing, should the parents be unable to do so. In many ways the social 
link between co-parents was more significant than that between 
godparents and godchildren. Co-parents were required to treat each 
other with respect and assist one another in times of need. Mar- 
riage or sexual relations between co-parents were considered inces- 
tuous; an insult to a co-parent was a grave matter, condemned by 



68 



The Society and Its Environment 



the community at large. In the countryside, ties to godparents had 
daily social significance; children visited their godparents often and 
were expected to treat them with particular respect. Not even quar- 
rels or the death of the godchildren should break the ties between 
co-parents. 

Compadrazgo served different purposes in rural and urban areas 
and among different social classes. In cities and among the more 
prosperous, the institution principally fulfilled the requirements for 
a Roman Catholic baptism. Godparents assumed the cost of the 
baptism and were expected to give gifts on a godchild's birthday 
and other significant occasions. Rarely did they have to assume 
the responsibility of raising a godchild; if they did, the financial 
wherewithal was provided through inheritance. In the countryside 
and among the poor, the responsibility to care for the godchild was 
taken more literally. If the parents were unable to care for their 
offspring, a godparent was expected to do so or find someone who 
could. Godparents should not only give gifts to the godchild on 
special occasions, but also assist with his or her schooling. 
Co-parents should come to one another's aid in times of social or 
economic distress. 

The choice of a godparent also varied by social class. The urban 
and rural upper class and the urban middle class selected friends 
or relatives. In both groups co-parents were usually social equals. 
The institution had less practical significance than it had among 
the poor. For those of limited means, the emphasis was less on the 
feeling of friendship the co-parents shared and more on the poten- 
tial economic benefits that the child might enjoy. Among peasants 
or the urban poor the choice could be either a relative or an influ- 
ential benefactor {patron) (see Rural Society, this ch.). When a patron 
agreed to serve as a godparent, the lower-class individual was 
entitled to more extensive dealings with the higher- status person. 
He or she could, for example, visit the patron's house and expect 
to be received hospitably. The patron expected in return absolute 
and unquestioning loyalty. In essence, this system satisfied the poor 
person's need to look above his or her class for protection, while 
satisfying the desire of the wealthy for a more loyal following. Where 
the expectations were met on both sides, compadrazgo could blunt 
the obvious economic disparities in small towns and the countryside. 
It also had important political implications. It was through such tra- 
ditional kinlike ties that landholders from the ruling National 
Republican Association-Colorado Party (Asociacion Nacional 
Republicana — Partido Colorado) could mobilize support among 
the peasantry (see The Twin Pillars of the Stroessner Regime, 
ch. 4). 



69 



Paraguay: A Country Study 

Rural Society 

Rural life, like much else in Paraguay, was defined by a series 
of dichotomies: commercial versus subsistence agriculture, large 
landholdings as opposed to small farms, and landowners in con- 
trast to squatters. Land ownership was highly concentrated, and 
large-scale enterprises dominated the production of lucrative com- 
mercial crops (see Agriculture, ch. 3). Most farms were smaller 
than ten hectares. In the densely settled central region (compris- 
ing the departments of Paraguan, Cordillera, Guaira, and Caa- 
zapa), these small landholdings constituted as much as 80 percent 
of all landholdings. 

Although inequality underlay the system as a whole, the exten- 
sive land reserves and low population density that characterized 
Paraguay until the 1950s softened the impact of the disparities 
recorded in agricultural surveys and censuses. The largest hold- 
ings were vast ranches in the Chaco or along the country's eastern 
border, regions of low population density. Large estates were typi- 
cally worked extensively, but custom permitted squatters to occupy 
the fringes with little interference. The landowner would be either 
unaware of their presence or undisturbed by it. Even where there 
were terms of rent for land, they might be as minimal as occasional 
labor for the landlord or gifts of produce at harvest or on the land- 
lord 's birthday. Although surveys showed that few Paraguayans 
owned land, fewer still paid much for the privilege of using it. 
Historically, squatters were useful to a landowner in a variety of 
informal ways. They were a pool of reserve labor, semi-obligated 
to work for below-average wages during labor shortages. The 
presence of squatters also was insurance against more serious 
incursions on one's lands in an environment where clear land titles 
were not easy to come by. Patterns of land use were deeply ingrained 
in any event, and they often limited a landowner's options in dealing 
with tenants. 

The relationship between the landowner and squatters was 
usually transitory, but in some instances it persisted for genera- 
tions as a patron-peon arrangement. The patron served as an advo- 
cate for his peones; they were to him the elements of a loyal following. 
In essence, the connection was that of client to powerful protector. 
It implied unquestioning loyalty and respect on the part of the peon. 

The patron-peon relationship served as a metaphor and model for 
proper social relations for rural society; indeed, the terms effec- 
tively delineated social boundaries. Peasants used patron as a general 
term of respectful address in speaking to any urban person of ob- 
viously higher status. Townspeople generalized/?^ to refer to any 



70 




Workers picking strawberries near Paraguari 
Courtesy Inter-American Development Bank 



lower-class person — although not in direct address, because to call 
a person peon to his face would be a breach of etiquette. The rela- 
tionship also colored economic relations between patron and peon; 
anthropologists Elman and Helen Service described contracting 
wage labor between the two: "... a. patron hires a person as though 
he were asking a personal favor, and the peon responds as though 
he were obliged to grant it." Economic relations as a whole were 
ideally enmeshed in social ties like that of patron to peon. Storekeepers 
each had their loyal followings, and it was considered disloyal to 
shop at another shop merely to take advantage of better prices. 
In return, customers expected preferential treatment, small favors, 
and some credit when they needed it. 

Peasant farming was characterized by "agricultural nomadism"; 
the search for a better plot or improved circumstances was peren- 
nial. Cultivation was slash- and-burn followed by a fallow period 
of several years. Farmers preferred land on the fringe of primary 
or dense secondary strands of tropical forests. Agricultural income 
among small farmers was not particularly tied to land tenure. A 
successful peasant might own, rent, or simply use the lands he 
farmed. 

Population growth eventually increased pressure on farmland 
and forest reserves. The pressure was most acute in the arc stretch- 
ing roughly 100 kilometers north and east of Asuncion, where 



7! 



Paraguay: A Country Study 

approximately half the farms and half the squatters in the country 
were found. By the late 1950s, squatters and landowners faced 
increasingly bitter confrontations over communal grazing rights 
and land boundaries. Large landholders called for programs to 
"decongest" the central area and move the squatters to less popu- 
lated regions along the northern and eastern borders. 

These calls led to the formation in 1963 of an agrarian reform 
agency — the Rural Welfare Institute (Institute de Bienestar 
Rural — IBR) — charged with the task of resettling peasants in the 
eastern border region, especially the departments of Alto Parana, 
Canendiyu, Amambay, and Caaguazii. Although the program 
resettled many families in the 1960s and 1970s, critics noted that 
efforts to improve the farmers' standard of living were hampered 
by a lack of credit, technical assistance, and infrastructure (see Land 
Reform and Land Policy, ch. 3). 

The eastern region enjoyed an economic boom during the build- 
ing of the Itaipu hydroelectric power plant (see Electricity, ch. 3). 
As construction was completed, however, thousands of laborers lost 
their jobs. In the meantime, the land tenure situation in the region 
had changed dramatically. Many large landowners sold their 
properties to Brazilian and other foreign agribusinesses. These new 
owners, more committed than their predecessors to modern farm- 
ing techniques, strongly objected to the presence of peasants on 
their properties. In addition, thousands of Brazilian farmers entered 
the area to claim properties significantly cheaper than comparable 
lands in their own country (see Immigrants, this ch.). As a result, 
the erstwhile Itaipu laborers were unable to resume the practice 
of occupying plots as squatters. Clashes occurred between squat- 
ters and authorities throughout the mid-1980s. During the same 
period, the demand for farm laborers declined as the large-scale 
timber and soybean enterprises in the area became more 
mechanized. 

Despite these dramatic changes in land tenure, many other 
aspects of rural society remained unchanged into the late 1980s. 
Most farming was subsistence-oriented. Given a holding of some 
ten hectares, a family might keep four to six hectares under actual 
cultivation at any given time. The traditional tool kit and techno- 
logical repertoire reflected the limited economic opportunities the 
countryside afforded most farmers. 

The family was the chief source of farm labor. Men usually 
cleared the land and prepared the soil; women and children planted, 
weeded, and harvested the crops. Men were frequently absent in 
search of wage labor and women were accustomed to manage the 
farm in their absence. Farms permanently headed by women were 



72 



A family with a property deed issued by the Rural Welfare Institute 
Courtesy Inter -American Development Bank 



73 



Paraguay: A Country Study 

rare, however; a woman widowed or deserted by her spouse typi- 
cally moved to a nearby town. 

Neighbors frequently exchanged labor for various agricultural 
tasks; recipients were obliged to return the assistance when the neigh- 
bor needed help, although this arrangement was not formalized. The 
rate of labor exchange was greater when, as was often the case, neigh- 
bors were also relatives. Most crops had a lengthy planting and har- 
vesting season, which spread out the periods of peak labor demand 
and facilitated the exchange of labor among households. 

Wage labor was important to the family's subsistence. In some 
regions men supplemented agricultural production by gathering 
the yerba mate bush — the leaves of which produced a bitter tea 
consumed by Paraguayans — or by hunting game. If the homestead 
was along a major road, women sold handicrafts. Raising livestock 
often was a subsidiary source of income. 

The numerous small towns dotting the eastern half of the coun- 
try every ten to twenty kilometers were the loci of commercial 
relations and all effective political and religious authority. A town's 
inhabitants normally included a few large commercial ranchers, 
wholesalers and retailers of all kinds and degrees of prosperity, small 
manufacturers, government officials, and a few professionals such 
as teachers and pharmacists. There were numerous poor people 
who eked out a living as servants or laborers. The occupational 
specialists common to rural Paraguay — barbers, curers, and crafts- 
men — were typically town dwellers. Most households headed by 
females were urban; the women earned their livelihood as storekeep- 
ers, servants, seamstresses, laundresses, curers, midwives, or cigar- 
makers. 

Peasants attended town functions primarily as observers. Rural 
families might visit a nearby town during its saint's fiesta, but 
church would be too far away for regular attendance. The lay func- 
tionaries who attended to many church affairs in the community 
were urban and prosperous. Civic events and fiestas themselves 
reflected enduring social distinctions based on wealth and breed- 
ing: that between la gente (the common people) and la sociedad 
(society, those with wealth and the required social graces). Fiestas 
traditionally included separate dances for the two groups that might 
be held on different nights or in different locations. There was little 
doubt about who should attend which function. The only role for 
la gente at the formal dance for the upper crust was as observers. 

Migration and Urbanization 

Historically, Paraguay had been an overwhelmingly rural coun- 
try. The 1950 census found only about one-third of the population 



74 



The Society and Its Environment 



to be city dwellers. The human landscape for most of the country 
east of the Rio Paraguay — where nearly all Paraguayans lived — 
was one of scattered homesteads interspersed with small towns of 
fewer than 1,000 inhabitants. 

Most Paraguayan communities existed in varying degrees of iso- 
lation. In the late 1980s, only 20 percent of the country's roads 
were paved (see Transportation, ch. 3). For most people, travel 
was on foot or on horseback. The two- wheeled ox cart was the most 
common means of transport for agricultural produce. 

The isolation of the countryside masked extensive migration, 
however. Despite rudimentary transportation facilities, the rural 
populace was mobile. Slash-and-burn agriculture required a lengthy 
fallow period, and farmers typically moved as yields declined on 
their plots. Rural-rural migration was the typical pattern, but the 
typical move was not over a long distance. According to the 1950 
census, in most departments at least 70 percent of all Paraguayans 
were living in the department of their birth. In the densely settled 
departments of the central region, the proportion was 90 percent. 

There were, however, several migration paths of longer distance 
and duration. In the first half of the twentieth century, for example, 
many peasants contracted to work on the yerba mate plantations 
along the eastern border. Working conditions were so wretched 
that few workers would willingly stay on past their contracted time. 
Others worked on the riverboats or in timber or logging operations. 

There also was a long history of Paraguayan emigration to 
Argentina; the 1869 Argentine census enumerated several thousand 
Paraguayan emigres. The numbers recorded rose steadily through- 
out the twentieth century. Estimates of Paraguayans resident in 
Argentina in the early 1970s ranged from 470,000 to 600,000, or 
20 to 25 percent of Paraguay's total population at that time. Between 
1950 and 1970, anywhere from 160,000 to 400,000 Paraguayans 
left their homeland for Argentina. Males predominated slightly, 
and male migrants tended to be younger than their female 
counterparts — there were few male Paraguayans over age thirty 
leaving for Argentina. Even low estimates suggested that approxi- 
mately 55,000 women between 20 and 29 years of age emigrated 
between 1950 and 1972. The emigation was sufficient to have a 
significant impact on Paraguay's natural rate of population increase. 

The majority of emigrants came from the central region — an 
indication of widespread underemployment in agriculture and 
artisanal industry in that area. Most men went to northeastern 
Argentina to seek better opportunities on that region's plantations 
as well as in the textile, tobacco, and lumber industries. The 
migrants generally were successful — at least they tended to find 



75 



Paraguay: A Country Study 

salaried employment rather than eke out an existence in self- 
employment. Women, following a pattern typical of Latin Ameri- 
can rural-urban migration for females, migrated to Buenos Aires 
more frequently and found employment in domestic service. Men 
who migrated to Buenos Aires gravitated to the construction trades. 

The path to Argentina was sufflciendy travelled to make the way 
easier for later migrants. Some Argentine companies recruited in 
Paraguay. Experienced emigrant workers brought friends and rela- 
tives with them when returning from visits home, thus sparing the 
new migrants a lengthy search for housing and employment. 

From the early 1960s through the early 1980s, the departments 
along the country's eastern border also were a favored destination 
for longer-distance rural-rural migrants. Most came from the central 
region — an area that, as a result of out-migrations, grew in popu- 
lation at only half the rate for the nation as a whole during the 
1972-82 intercensal period. In 1950 the central region accounted 
for half of Paraguay's total population, but by 1982 the propor- 
tion had declined to about 38 percent. Between 1967 and 1972, 
an estimated 40,000 peasants left the departments of Cordillera, 
Paraguari, and Caazapa in search of better living and working con- 
ditions. These departments' share of total population declined from 
more than 21 percent in 1972 to less than 17 percent in 1982. During 
the same intercensal period, the population of the three depart- 
ments grew at a scant 0.1 percent in contrast to the 2.7 percent 
growth rate for Paraguay as a whole. 

By contrast, the eastern departments gained population dramat- 
ically during the 1972-82 period. The population of the eastern 
region as a whole grew at a rate more than 2.5 times the national 
average. The populations of both Alto Parana and Caaguazu grew 
at a rate of roughly 10 percent annually. Between 1960 and 1973, 
the IBR resettled an estimated 250,000 rural Paraguayans in 
agricultural colonies in underpopulated regions with some poten- 
tial for increased agricultural production. 

Despite Paraguay's essentially rural character, Asuncion already 
had a well-defined role by the end of the colonial era as the hub 
of government, commerce, and industry. Goods flowed from the 
capital to the individual towns of the countryside — the towns them- 
selves exchanged little with each other. Agricultural products were 
routed to Asuncion; in return, manufactured goods went out to 
rural areas. Asuncion's preeminence over other cities was made 
sharply evident by the 1950 census. That census enumerated 7 
cities with more than 5,000 inhabitants, but only 1 , Asuncion (which 
had a population slightly more than 200,000), with more than 
20,000 residents. 



76 



Asuncion skyline looking toward 
the main business and financial district 
Courtesy Inter-American Development Bank 

Yet even Asuncion, political scientist Paul Lewis observed, had 
the air of a "sleepy tropical outpost." Until the 1960s, automo- 
biles and telephones were rare; perhaps half of the capital's homes 
had electricity. The city was without a piped water supply and sew- 
age disposal system. Most families bought drinking water from ped- 
dlers who sold it door-to-door by mule. 

From the 1960s through the early 1980s, however, migrants 
flocked to the region surrounding and including Asuncion. The 
capital experienced its fastest growth in the 1960s, when its popu- 
lation grew roughly 3 percent annually (see table 3, Appendix). 
Although Asuncion itself lagged during the 1970s, growing at a 
mere 1.6 percent per year, the metropolitan region grew at rates 
well above the national average. 

Most migrants to Asuncion found employment in the service 
sector or in small artisanal enterprises calling primarily for 
unskilled laborers. Despite the low wages they offered, these jobs 
exerted a pull for potential migrants because they were mar- 
ginally better than what was available in the countryside. The Asun- 
cion area had long attracted rural-urban migrants, which meant 
that many rural dwellers considering a move could find assis- 
tance from kin who had made the move earlier. The construction 



77 



Paraguay: A Country Study 

boom in the 1970s also drew substantially greater numbers from 
rural Paraguay to Asuncion. 

Urbanization in the 1970s and early 1980s also was fueled by 
economic expansion along the eastern border. Spurred by the Itaipu 
hydroelectric project, the urban population of Alto Parana grew 
20 percent annually during the intercensal period from 1972 to 1982. 
The population of Puerto Presidente Stroessner, the city nearest the 
project, expanded nearly sixfold during the 1970s, as did the popu- 
lation of nearby Hernandarias. Cities in Amambay also grew during 
the 1970s, although at a more modest annual rate of 6 percent. 

As a result of growth along the eastern border, by 1982 Paraguay 
had more than 30 cities with at least 5,000 inhabitants. This eastern 
expansion helped balance the dramatic growth occurring in Asun- 
cion and spared Paraguay the "hyper-urbanization" characteris- 
tic of many Latin American capitals. In 1950 the metropolitan area 
had accounted for about 20 percent of total population; by the early 
1980s, this proportion had increased modestly to 25 percent. 

Religion in Society 

In the 1980s an estimated 92 to 97 percent of all Paraguayans 
were Roman Catholics. The remainder were Mennonites or mem- 
bers of various Protestant groups. The 1967 Constitution guarantees 
freedom of religion, but recognizes the unique role that Catholi- 
cism plays in national life. The president must be a Roman Catho- 
lic, but clergy are enjoined from serving as deputies or senators 
and discouraged from partisan political activity. Relations between 
church and state traditionally were close, if not always cordial. 

A papal decree created the Bishopric of Asuncion in 1547, and 
the first bishop arrived in the diocese in 1556. In 1588 three Jesuits 
came with the intent of pacifying and converting the Indians. 
After the arrival of additional Jesuits and Franciscans, the priests 
began working in the southeastern area of modern Paraguay and 
on the shores of the Rio Parana in parts of what is now Argentina 
and Brazil. 

The Jesuits soon realized that they had to protect the Indians 
from enslavement by the growing numbers of Spanish and Por- 
tuguese if they were going to convert them. They accomplished 
this by settling the Indians in reducciones (townships) under Jesuit 
direction. At one point about 100,000 Indians lived in the reduc- 
ciones; the system lasted a century and a half until the Jesuits' 
expulsion (1767). Following the end of the Jesuit regime, the reduc- 
cion Indians were gradually absorbed into mestizo society or 
returned to their indigenous way of life (see The Sword of the Word, 
ch. 1). 



78 



The Society and Its Environment 



For much of the nineteenth century, church-state relations ranged 
from indifferent to hostile. The new state assumed the preroga- 
tives of royal patronage that the Vatican had accorded to the Spanish 
crown and sought to control bishops and the clergy. Jose Gaspar 
Rodriguez de Francia (1814-40) was committed to a secular state. 
He suppressed monastic orders, eliminated the tithe, instituted civil 
marriage, and cut off communication with the Vatican. Francisco 
Solano Lopez (1862-70) used the church as a branch of govern- 
ment, enlisting priests as agents to report on the population's dis- 
affection and signs of subversion. 

Church-state relations reached their nadir with the execution of 
the bishop of Asuncion, Manuel Antonio Palacio, during the War 
of the Triple Alliance (1865-70). By the war's end, there were only 
fifty-five priests left in the country, and the church was left leader- 
less for eleven years. 

The modern Paraguayan church was established largely under 
the direction of Juan Sinforiano Bogaron (archbishop of Asuncion, 
1930-49) and Anibal Mena Porta (archbishop of Asuncion, 
1949-69). Both envisioned a church whose role in the country's 
endemic political struggles was that of a strictly neutral mediator 
among the rival factions. 

Starting in the late 1950s, the clergy and bishops were frequently 
at odds with the government. Confrontations began with individual 
priests giving sermons calling for political freedom and social justice. 
The activities of the clergy and various lay groups like Catholic 
Action (Accion Catolica) pushed the church hierarchy to make 
increasingly critical statements about the regime of Alfredo Stroess- 
ner Mattiauda (president since 1954). 

In the 1960s the Catholic University of Our Lady of Asuncion 
became a center of antiregime sentiment. Students and faculty 
began cooperation with workers and peasants, forming workers' 
organizations as an alternative to the government- sponsored union. 
They organized Christian Agrarian Leagues (also known as peasant 
leagues) among small farmers. The organizations sponsored liter- 
acy programs, welfare activities, and various types of cooperatives. 
In addition, Catholics operated a news magazine and radio 
station — both critical of the government. 

Throughout the 1970s and 1980s, there were sporadic student 
demonstrations and government crackdowns. The church criticized 
the lack of political freedom and the government's human rights 
record. The government's principal countermeasures included 
expelling foreign-born clergy and periodically closing the univer- 
sity, news magazine, and radio station. In response, the archbishop 
of Asuncion excommunicated various prominent government 



79 



Paraguay: A Country Study 

officials and suspended Catholic participation at major civic and 
religious celebrations (see Interest Groups, ch. 4). 

On a popular level, Catholicism was an essential component of 
social life. Even the poorest of homes contained pictures of the saints 
and a family shrine. Catholic ritual marked the important transi- 
tions in life: baptism, confirmation, marriage, and burial. Parti- 
cipation in the rites of the church reflected class and gender expec- 
tations. The poor curtailed or delayed rituals because of the 
costs involved. 

Sex roles also affected religious participation. Devotion fell into 
the female sphere of activities. Men were not expected to show much 
concern about religion. If they attended mass, it was infre- 
quently, and normally men stood in the rear of the church ready 
to make a quick exit. Women were supposed to be more devout. 
Regular participation in church services was seen as a virtue on 
their part. They were more likely to seek the church's blessing at 
critical points in the family's existence. 

Religion served as perhaps the only institution in society that 
transcended kinship relations. Both politics and economic activi- 
ties were enmeshed in the relations of kin; they reflected the family 
feuds and the accumulated loyalties of generations past. It 
was in popular religion, however, especially in the communal 
religious fiestas, that Paraguayans of every social stratum partici- 
pated and the concerns of family and kin were, to a degree, 
muted. Fiestas were community and national celebrations; they 
served as exercises in civic pride and Paraguayan identity. Church 
holidays were public holidays as much as religious occasions. 

The populace enjoyed the celebrations associated with fiestas, 
but actual belief and practice were typically uninformed by ortho- 
dox Catholic dogma. Especially in rural Paraguay, the saints 
associated with popular devotion were often no more than revered 
local figures. 

Religious societies played an important role, planning and 
organizing local fiestas and undertaking welfare activities. Vari- 
ous lay brotherhoods assumed responsibility for assisting widows 
and children, among other duties associated with the care of 
the poor. 

Minority Groups 

Although the vast majority of Paraguayans were mestizos and 
the population was largely homogeneous, minorities became an 
increasingly significant force during the 1970s and 1980s. 
Paraguay's population historically had included small numbers 
of immigrants from Europe, the Middle East, Asia, and Latin 



80 



The Society and Its Environment 

America. During the 1970s, however, thousands of Brazilian set- 
tlers crossed the border into Paraguay's eastern departments, dra- 
matically affecting life there. During the same period, thousands 
of Koreans and ethnic Chinese settled in urban Paraguay. Final- 
ly, there were the remnants of the country's original Indian popu- 
lation who continued to follow an indigenous way of life. 

Immigrants 

A trickle of European and Middle Eastern immigrants began 
making their way to Paraguay in the decades following the War 
of the Triple Alliance. The government pursued a pro-immigration 
policy in an effort to increase population. Government records 
indicated that approximately 12,000 immigrants entered the port 
of Asuncion between 1882 and 1907; of that total, almost 9,000 
came from Italy, Germany, France, and Spain. Migrants also 
arrived from neighboring Latin American countries, especially 
Argentina. 

Most migrants — even many who began their lives in Paraguay's 
agricultural settlements — typically found their way into urban trades 
and commerce and became the backbone of the country's small 
middle class. Middle Easterners tended to remain culturally and 
socially distinct even after several generations. European and Latin 
American immigrants were more readily assimilated. Nonetheless, 
in small towns non-Paraguayan family origins were noted for gener- 
ations after the original migrant's arrival. 

Although most minority groups tended to prefer urban life, 
Japanese immigrants founded and remained in agricultural colo- 
nies. Until the twentieth century, Japanese immigration was limited 
by Paraguay's unwillingness to accept Asian colonists; Japanese 
themselves preferred the more lucrative opportunities offered by 
the expanding Brazilian economy. When Brazil set quotas on Asian 
immigration in the 1930s, however, a Japanese land company set 
up an agricultural settlement southeast of Asuncion. Two more 
colonies near Encarnacion followed in the 1950s. A 1959 bilateral 
agreement between the Japanese and Paraguayan governments 
encouraged further immigration. By the 1980s there were about 
8,000 Japanese settlers in agricultural colonies. The colonists made 
a concerted effort to preserve Japanese language and culture with 
varying degrees of success. Until the end of World War II, the earli- 
est settlement supported a parallel educational system with sub- 
jects taught entirely in Japanese; the colonists eventually limited 
this to supplemental Japanese language classes. By the late 1960s, 
many Japanese children could speak in Japanese, Guarani, and 



81 



Paraguay: A Country Study 

Spanish. But there was strong bias against Japanese-Paraguayan 
intermarriage . 

Like the Japanese, most German-speaking Mennonite 
immigrants remained in agricultural colonies. The bulk of the Men- 
nonite population came between the 1920s and the 1940s and 
established three colonies in the central Chaco. In 1926 approxi- 
mately 2,000 persons left Canada after the passage of legislation 
requiring English to be the language of instruction in Mennonite 
schools. The Paraguayan government, eager to develop the Chaco, 
readily allowed Mennonites to conduct their own schools in Ger- 
man and exempted the immigrants from military service. 

The original Menno Colony was followed by the establishment 
of the Fernheim Colony in 1930 and the Neuland Colony in 1947. 
These latter two groups of colonists, also German-speaking, 
fled religious persecution in the Soviet Union. The Fernheimers, 
who had higher levels of education and more exposure to urban 
life than did the Mennos, also founded the town of Filadelfia, 
which eventually became an important agricultural supply center 
for the central Chaco. Some Fernheimers and Neulanders left 
the Chaco to establish small colonies in Eastern Paraguay. In the 
early 1980s, there were approximately 15,000 Mennonites in 
Paraguay; two-thirds lived in the Chaco, with the remainder 
in Caaguazu, San Pedro, and Itapua departments and in Asun- 
cion (see Agriculture, ch. 3). 

Until the 1970s, the Brazilian presence in Paraguay was rela- 
tively minor and was confined primarily to privately organized 
agricultural colonies along the easter border. In 1943 there were 
fewer than 500 Brazilian farmers in all of Paraguay; throughout 
the 1950s and 1960s, the proportion of Brazilians in the eastern 
border region held constant at between 3 and 4 percent of the total 
population of the area. 

In the early 1970s, however, Brazilian immigrants, persuaded 
by a variety of factors, began streaming into the region from the 
neighboring Brazilian state of Parana. In 1967 the Paraguayan 
government repealed a statute that had prohibited foreigners 
from purchasing land within 150 kilometers of the country's 
borders. During the same era, increased mechanization of soy- 
bean production in Parana generated a growing concentration of 
landholdings in that area. Brazilian farmers whose holdings were 
too small to support increased production costs sold their land 
in Brazil and bought cheap land in Paraguay. In the late 1970s, 
land along Paraguay's eastern frontier was seven to eight times 
cheaper than comparable land in Brazil. The disparity in prices 



82 



Mennonite farmers from San Pedro Department 
Courtesy Richard S. Sacks 

drew large investors who cleared the land of saleable timber, then 
subdivided it and sold it to Brazilian immigrants. 

Official records gave only an imprecise sense of the number of 
Brazilians who had come to the country. According to the 1982 
census, there were 99,000 Brazilians residing in Paraguay. Most 
analysts discounted this figure, however, and contended that 
between 300,000 and 350,000 Brazilians lived in the eastern border 
region. Along the border, the Brazilian cruzeiro was more com- 
monly used than the guarani (for value of the guarani — see Glos- 
sary), and Portuguese was heard more often than Spanish or 
Guarani. Many Paraguayan peasants and Indians were evicted 
from lands purchased by immigrants. The pace of land sales 
increased to such a point that undercapitalized Paraguayan farmers 
who had settled in the region as part of IBR's colonization 
programs were selling their lands to Brazilian farmers and 
financial groups. 

Analysts also rejected government figures on the number of 
immigrants from the Republic of Korea (South Korea), Hong 
Kong, and Taiwan. The 1982 census reported that there were 2,700 
Koreans in Paraguay, along with another 1,100 non-Korean or 
non-Japanese Asian immigrants. The actual number of Koreans 
and ethnic Chinese, however, was believed to be between 30,000 
and 50,000. Virtually all Koreans and ethnic Chinese lived in 



83 



Paraguay: A Country Study 

Puerto Presidente Stroessner or Asuncion and played a major role 
in the importation and sale of electronic goods manufactured in 
Asia. 

Indians 

Sixteenth-century Iberian explorers in South America found the 
Atlantic Coast of modern-day Brazil in the control of Guarani 
Indians; the groups on the southern Brazilian coast, known as the 
Tupinamba, had extended their territory inland to the Rio 
Paraguay, Rio Parana, and Rio Uruguay. Various migrations even- 
tually brought these and other closely related groups to the eastern 
flanks of the Andes. 

The Spanish rapidly subjugated and assimilated the Guarani they 
encountered in what later became Eastern Paraguay (see The 
Young Colony, ch. 1). High rates of intermarriage or concubinage 
between Spanish settlers and Guarani women created a society that 
was overwhelmingly mestizo. In the resulting synthesis, the 
dominant social institutions and culture were Hispanic; the com- 
monly spoken language, however, was Indian in origin. 

As many as 100,000 Indians lived in Jesuit-run reducciones dur- 
ing the seventeenth and eighteenth centuries. After the expulsion 
of the Jesuits from Paraguay in 1767, the reducciones were taken 
over by civil authorities; subsequent mismanagement caused their 
population to decline. The survivors either were assimilated into 
the rural mestizo population or fled to the hinterland (see Religion 
in Society, this ch.). 

Over the next two centuries, relations between vestigial groups 
of Indians and the dominant rural Paraguayans were infrequent. 
When interaction occurred at all, it was often violent. Neverthe- 
less, the War of the Triple Alliance reduced the Paraguayan popu- 
lation sufficiently to reduce pressure on forest lands and thus 
buffered the remaining tribes. 

The Indians' situation remained relatively stable until the mid- 
twentieth century. Although much land along the eastern border 
was held by foreign investors, these vast estates were not worked 
intensively. Hunters and gatherers therefore had sufficient reserves 
of land, as did the more sedentary populations. Although Indians 
might occasionally serve as laborers, they were not pressured by 
other rural settlers or missionaries. In the Chaco most tribes 
adopted sheep and goat herding; the inhospitable nature of 
the region provided a natural barrier to mestizo settlement and pro- 
tected many groups from outside interference until the Chaco War 
of 1932-35. 



84 



The Society and Its Environment 



In the early 1980s, the Paraguayan Indian Institute (Instituto 
Paraguayo del Indigena — Indi) estimated the country's Indian 
population at nearly 40,000. Indi's efforts to count the Indians met 
with significant resistance from some indigenous leaders. Various 
anthropologists placed the count higher, at 50,000 to 100,000, or 
1.5 to 3 percent of the total population. But all the numbers 
represented only the roughest of approximations. 

Paraguay's indigenous peoples were divided into seventeen tribal 
groups representing six language families. Even in the ethnographic 
literature, there was confusion about the precise distinctions among 
tribes and the linguistic relationships involved. 

In general, observers relied upon a person's self- identification 
and that of those in contact with him or her in categorizing the 
individual as an Indian. Those who viewed themselves as tribal 
members — separate and distinct from the national culture — and 
who were seen by others as indios or indigenas, were classified as 
Indians. Language was a less certain cultural marker, but in general 
Indians spoke as their primary language neither Spanish nor the 
variety of Guarani used by most Paraguayans. 

Despite pride in their Guarani heritage and language, many 
Paraguayans had negative feelings toward the country's remain- 
ing Indians and viewed nomadic tribes as subhuman. A survey 
of attitudes toward Indians in the 1970s found that 77 percent of 
respondents thought: "They are like animals because they are 
unbaptized." Indianness was a stigma; even Indians who became 
sedentary and Christian faced continued discrimination in employ- 
ment and wages. According to estimates in the 1980s, the 3 per- 
cent of the population considered Indians accounted for roughly 
10 percent of the poorest segment of Paraguayan society. 

The Rio Paraguay split the country's Indians: the four groups 
in Eastern Paraguay all spoke varieties of Guarani, whereas the 
approximately thirteen tribes of the Chaco represented five lan- 
guage families. In the 1970s and 1980s, the situation of specific 
tribes varied according to a number of circumstances. The prin- 
cipal factor affecting a tribe's well-being was the extent and kind 
of pressure brought to bear on Indians and their traditional terri- 
tories by outsiders. 

The Guarani speakers of Eastern Paraguay were scattered 
throughout the (formerly) remote regions to the northeast, along 
the country's border with Brazil. Although much land occupied 
by Indians had been legally owned by large estates, the tribes tradi- 
tionally had been able to practice slash-and-burn agriculture and 
hunting and gathering largely undisturbed. Members of some tribes 
occasionally worked as wage laborers on the immense yerba mate 



85 



Paraguay: A Country Study 

plantations, whereas others had no peaceful relations with the larger 
society. Beginning in the 1960s, however, the tribes' customary 
ways of life were eroded by the IBR-sponsored settlements, the 
influx of Brazilian migrants, the purchase and more efficient oper- 
ation of many estates by multinational firms, and the initiation of 
large-scale hydroelectric projects. As a result of increasing intru- 
sions into traditional Indian lands, almost all Indians in Eastern 
Paraguay were involved in wage labor to some degree by the late 
1970s. 

For the past century, the largest tribe in Eastern Paraguay, the 
Paiu-Tavyterau, subsisted through a combination of slash-and-burn 
farming, fishing and hunting, and periodic wage labor. For them 
the far-reaching changes of the 1960s and 1970s meant loss of land, 
the depletion of hunting and fishing resources, and increased 
dependence on wage labor. By the early 1970s, anthropologists 
found malnutrition widespread and tuberculosis endemic among 
tribal members. Estimates of mortality during the first two years 
of life were as high as 50 percent. The Ava-Chiripa, to the south 
of the Paiu territory, had been subject to even more outside 
pressure: they were well on the way to being dispossessed of their 
traditional lands and becoming dependent on wage labor. 

Contact between the Ache tribe and the larger society had never 
been peaceful. During the 1960s and 1970s, a variety of rural 
Paraguayans raided and enslaved some of the Ache, who continued 
to follow a seminomadic existence in Eastern Paraguay's forests. 
By the late 1970s, the Ache survived only in a few communities 
run by missionaries and on a few ranches in Eastern Paraguay. 
Because of the Ache's more secure position on missions and ranches, 
organized raiding was largely eliminated by the early 1980s. 
Nonetheless, small groups of Ache on return trips to the forest to 
forage and hunt were often the targets of rural Paraguayans, and 
reports persisted in the mid-1980s of Indians being held involun- 
tarily by Paraguayan families. 

The Chaco Indians had a more varied history of contact with 
outsiders. They tenaciously resisted colonial efforts at pacification 
and conversion. Indeed, the warlike Indians, in combination with 
the inhospitable Chaco terrain and climate, presented an effective 
barrier to Spanish expansion west of the Rio Paraguay. The Chaco 
Indians subsisted in a traditional manner by hunting and gather- 
ing and raising livestock. The sale of animal skins and periodic 
wage labor in tanning factories along the Rio Paraguay or on sugar 
plantations in Argentina provided a source of cash income. 

The tribes lived without undue interference until the Chaco War 
(and the subsequent expansion of ranching in the region) and 



86 



A vocational arts secondary school in Limpio, Central Department 
Courtesy Inter-American Development Bank 

Mennonite colonization in the central Chaco. Almost all Chaco 
tribes became more sedentary after the war. The Mascoi-Toba 
speakers of the central and southeastern Chaco were especially 
affected, and by the 1980s many spoke only or primarily Guaranf. 
Some tribes that provided scouts for the army during the war later 
found occasional employment with military garrisons. The increase 
in ranching meant less land and game available to hunters and 
gatherers and a concomitant rise in the need for wage labor. After 
the government banned the sale of skins in an effort to preserve 
the declining animal population, the Indians became increasingly 
dependent on the region's cattle ranches for wage labor. Depen- 
dence also increased following the closing of most of the tanning 
factories. Demand for labor in ranching, however, declined precipi- 
tously as lands were cleared and fenced. In addition, the opening 
of the Trans-Chaco Highway meant that Indians had to compete 
with migrants, usually single males, from elsewhere in the coun- 
try. Ranchers often preferred employing these transients to assum- 
ing responsibility for allowing Indians with families to settle and 
work on their ranches. 

Language use among the Chaco tribes reflected the various ways 
that groups adapted to the presence of outsiders and the changing 
economy. Migration and wage labor brought with them a signifi- 
cant amount of intertribal marriage. Guaranf or (less frequently) 



87 



Paraguay: A Country Study 

Spanish came to serve as a lingua franca. In groups that had a his- 
tory of several generations of labor in the tanning factories, hus- 
bands and wives from different tribes often spoke Guaranf in their 
home. Their children were monolingual in that tongue until they 
learned Spanish at school. By the 1980s, it appeared that a num- 
ber of languages — Angaite, Guana, and Mascoi-Toba among 
them — might die out within the next generation. By contrast, a 
group of Mac 'a who settled on the west bank of the Rio Paraguay 
under the patronage of General Juan Belaieff, whom they had 
assisted in the Chaco War, remained almost entirely monolingual 
in Mac 'a except when engaged in commerce. 

In the late 1970s, researchers estimated that more than half of 
all Indians lived on settlements under the auspices of various mis- 
sionary organizations. This was particularly true of those groups 
whose first intensive contacts with Paraguayan society dated from 
the 1960s and 1970s. In the Chaco almost all Indians who were 
not scattered on individual ranches lived under the patronage of 
the missions. 

Historically, official government policy had often left Indians 
to the care of religious groups. Until the 1960s, the government's 
only defined Indian policy was in the form of a 1909 law that 
enjoined Paraguay "to take measures leading to the conversion 
of the Indians to Christianity and civilization . . . . " Because the 
legislation permitted missionaries to acquire land for Indian set- 
tlements, some tribes were able to obtain land. At the same time, 
however, the law increased the tribes' dependence on missionaries 
as advocates in dealing with the larger society. 

The missionaries offered the Indians under their care a mea- 
sure of protection from the worst predations of rural Paraguayans. 
In some cases, mission educational programs taught in Indian lan- 
guages offered the only hope that these tongues would be preserved 
at all. The impact of Christian proselytizing on indigenous belief 
and social institutions was less positive, however. Fundamentalist 
groups were particularly unrelenting in their efforts to eliminate 
indigenous beliefs. Anthropologists David Maybury-Lewis and 
James Howe noted that efforts to "crush witch doctors" drove a 
wedge between Christian and traditional believers within the same 
tribe. Critics charged that fundamentalist groups' aggressive prose- 
lytization destroyed Indian culture in the process of conversion. 

Roman Catholics had the longest history of missionary activity. 
Their efforts were focused on protecting Indians from the worst 
effects of outside incursions, in particular forced removals from 
tribal lands. The philosophy of the Second Vatican Council 



88 



The Society and Its Environment 



(1962-65) called for a process of gradual conversion that included 
respect for indigenous beliefs. 

Anglicans had been active in the southeast Chaco since the turn 
of the century. By the late 1970s, the Lengua converts at the 
Anglican mission were generally in charge of running the settle- 
ment. The most serious problems came from overcrowding as more 
and more Indians displaced from elsewhere in the Chaco sought 
refuge at the mission. 

Mennonites used Indians as a ready source of labor when they 
first settied in the central Chaco. As Mennonite-Indian relations 
became more complex, the Mennonites formed the Association of 
Indian-Mennonite Cooperative Services (Asociacion de los Servicios 
de Cooperation Indigena-Menonita — ASCIM) to proselytize and 
assist the Indians. As was the case with other mission settlements, 
the problems ASCIM faced grew as Indians forced off their lands 
elsewhere in the Chaco flocked to the Mennonite settlements. 
Although ASCIM had resettled about 5,000 Indians on their own 
land by the late 1970s, large numbers of landless people remained 
around Filadelfia, hoping for employment on Mennonite farms. 

A number of secular and official organizations attempted to assist 
Indians over the years. Inspired by the indigenist movement that 
flourished in Latin America in the early twentieth century, middle- 
and upper-class Paraguayans founded the Indigenist Association 
of Paraguay (Asociacion Indigenista del Paraguay — AIP) in the 
early 1940s. Over the years AIP campaigned for Indian rights and 
publicized the problems Indians faced. In the late 1970s and early 
1980s, the association was active in sponsoring legal defense and 
regional development projects for the tribes of Eastern Paraguay 
and in drafting legislation that established Indi. Indi's mandate 
was to help Indians improve their legal status, especially in mat- 
ters pertaining to employment and landholding. The efforts of Indi 
and other advocates for Indian rights resulted in enactment of legis- 
lation in 1981 that formally recognized the Indians' right to pur- 
sue their culture and way of life, stated that landholding was integral 
to the continued survival of Paraguay's Indians, and expanded the 
means through which communities could obtain formal legal sta- 
tus and title to their lands. 

Education 

Education in the colonial era was largely limited to the upper 
class. The wealthy either hired tutors or sent their children abroad. 
Although there were a few private schools in operation following 
the declaration of independence in 181 1 , they languished throughout 
most of the nineteenth century. The only secondary school closed 



89 



Paraguay: A Country Study 

in 1822. By the end of the War of the Triple Alliance, perhaps 
as little as 14 percent of the populace was literate. 

Starting with the inauguration of the public secondary school 
system in 1877, public education grew steadily in the decades fol- 
lowing the war. In 1889 the National University of Asuncion was 
founded, and in 1896 the first teacher-training school began opera- 
tion. By the eve of the Chaco War, there were several teachers' 
colleges, a number of secondary schools, and a few technical schools. 
The decades following the Chaco War were marked by widespread 
expansion of the educational system. Between the end of that war 
and the beginning of World War II, enrollments nearly doubled. 
They continued to expand in subsequent decades. Enrollments grew 
even faster at universities and secondary schools than at the elemen- 
tary level. 

Paraguay had two universities: the National University and the 
Catholic University. Both had branches in several interior cities. In 
the mid-1980s, about 20,000 students were enrolled in the National 
University and some 8,000 in the Catholic University. The number 
of applicants for university admission grew because of the growing 
numbers of students completing secondary school. In the mid-1970s, 
both universities began offering a variety of short-term degree pro- 
grams in an effort to meet the increased demand for admission. The 
programs were designed to reduce pressure on traditional profes- 
sional courses of study such as engineering, law, and medicine. 

Formal education was under the direction of the Ministry of Edu- 
cation and Worship. The six-year cycle of primary school was free 
and compulsory for children from ages seven to fourteen. Secon- 
dary education consisted of two three-year programs, each lead- 
ing to a baccalaureate degree. The diversified program emphasized 
training in the humanities and was preparatory to study at a univer- 
sity or teacher-training institute. The technical program was 
designed for students entering any of a number of postsecondary 
schools offering training in commerce, industry, or agriculture. 

Schools were financed by the government and a variety of user 
sources. The Ministry of Education and Worship's budget 
represented slightly less than 1 5 percent of the government budget 
in the early 1980s. Virtually all of the costs of rural primary schools 
and nearly 90 percent of the costs of urban primary schools were 
covered by government funds. Public secondary schools received 
from half to three-quarters of their budget for current expenditures 
from the national government. 

There was a perennial shortage of adequately trained teachers; 
this was especially true of rural teachers, who were often uncerti- 
fied. Primary school teachers were required to complete a two-year 



90 



A rural health clinic 
near Villarrica 
Courtesy 
Inter-American 
Development Bank 



postsecondary school training program. Secondary teachers 
were supposed to have an additional two years of specialized 
training. Curricula changes demanded extensive upgrading of 
teachers' skills. There were retraining programs available through 
the Higher Institute of Education and several regional centers. 

Reforms in the 1980s attempted to make the educational 
system more responsive to the needs of the population. Rural 
Paraguayans had long faced a lack of educational facilities, 
materials, and teachers. The reforms attempted to meet some of 
these needs through multigrade programs designed to achieve a 
more efficient allocation of scarce resources. By the early 1980s, 
there were about 2,000 multigrade programs reaching more than 
55,000 students. 

Student enrollments increased at all levels during the 1970s and 
early 1980s. Overall enrollment grew nearly 6 percent per year 
in the late 1970s. The number of students enrolled in the basic 
cycle of secondary school grew from 49,000 in 1975 to 76,000 
in 1980. The number of students attending primary school 
increased by roughly one-quarter during this period; rural school 
children, who historically had had very limited access to educa- 
tion, represented most of the increase. The number of rural 
children attending primary school increased by more than one- 
third between 1972 and 1981. 

Despite the growth of school enrollments, the proportion of 



91 



Paraguay: A Country Study 

school-age children enrolled in classes actually remained constant 
or declined between 1965 and 1985. Only in higher education did 
enrollments grow faster than the school-age population (see 
table 4, Appendix). 

In the mid-1980s, the official literacy rate was above 80 percent. 
More males than females were able to read and write, although 
literacy was increasing faster among females. About 90 percent of 
city dwellers could read; rural Paraguayans lagged behind their 
urban counterparts by about 10 percent. 

Critics charged that the official literacy figures gready overesti- 
mated the numbers who could actually read and write. They argued 
that the government counted as literate anyone who attended 
primary school — a dubious assumption given the large number of 
monolingual Guarani speakers who entered but failed to complete 
elementary school. Such speakers represented an estimated 90 per- 
cent of the children entering rural primary schools. Many men who 
entered the armed forces as conscripts first learned to read during 
their military service. 

In the early 1970s, less than 5 percent of those entering rural 
elementary schools finished this course of study, as compared to 
30 percent of urban youngsters. Only 1 percent of rural children 
finished secondary school; the figure for city children was 10 per- 
cent. Rural schools also were plagued with high rates of student 
absenteeism and grade repetition. A 1980 survey showed a sub- 
stantial improvement in the percentage of children completing the 
elementary school cycle. The figure for who completed their course 
of primary school studies had risen to 38 percent. Although the 
completion rate for rural students climbed to 25 percent, this figure 
was substantially below that for urban youngsters. 

In the late 1970s, the Ministry of Education and Worship 
attempted to deal with the crisis in rural education by developing 
a bilingual program for monolingual Guarani speakers. The pro- 
gram was designed to develop basic oral skills in Guarani and oral 
and written skills in Spanish. Guarani literature also was availa- 
ble at the secondary and university levels. 

Health and Welfare 

The Ministry of Public Health and Social Welfare was respon- 
sible for approving and coordinating all public and private activi- 
ties and programs dealing with health. Other agencies involved in 
the health sector included the Social Insurance Institute, the Mili- 
tary Health Service, and the Clinical Hospital of the National 
University. Health services were organized through a system 
of four hierarchical levels, each of increasing complexity and 



92 



The Society and Its Enviornment 



sophistication. Health services at the first level aimed at providing 
basic care for the community. Intermediate levels offered services 
of greater complexity to towns and cities, whereas the fourth level 
provided specialized services to the entire nation. 

Paraguay recorded impressive gains in health-care delivery in 
the 1970s and early 1980s. Following the government's launching 
of a massive immunization campaign in the late 1970s, the per- 
centage of infants vaccinated against diphtheria, pertussis, teta- 
nus, and measles went from 5 percent in 1977 to over 60 percent 
in 1984 (see table 5, Appendix). From 1973 to 1983, the propor- 
tion of infants receiving medical care rose from 5 1 percent to nearly 
75 percent, and prenatal care from 53 percent to nearly 70 per- 
cent. The supply of nurses relative to the population more than 
doubled between 1965 and 1981. By the early 1980s, surveys 
indicated that 60 to 70 percent of the populace had easy access to 
health care. 

Despite these achievements, the health-care system was beset 
by a number of problems. First of all, the proportion of the national 
budget allocated to health decreased as a result of the economic 
downturn of the early 1980s. In addition, international health agen- 
cies noted a lack of coordination among the agencies and institutes 
whose work affected health. Mechanisms for gathering informa- 
tion about the delivery of health services were inadequate; even 
the reporting of vital events and infectious diseases was limited. 
Government health services also lacked many necessary supplies. 
Finally, the heavy concentration of doctors and other health 
providers in urban areas resulted in a shortage of personnel for 
rural residents. 

In response to these problems, the government designed a broadly 
based program to augment community health organization and 
increase community participation. The program's objectives 
included upgrading the training of lay midwives, expanding 
health education, training traditional health practitioners and other 
volunteers, increasing the number of health centers in rural areas, 
and integrating health-care services with existing community 
organizations. Other priorities included lowering the morbidity and 
mortality rates among mothers and young children, controlling 
infectious diseases and diseases that could be checked through vac- 
cination, and improving child nutrition. 

The Sanitary Works Corporation (Corporation de Obras 
Sanitarias — Corposana) provided drinking water and sewage dis- 
posal services for towns of more than 4,000 inhabitants. The 
National Service for Environmental Sanitation (Servicio Nacional 
de Sanitaria Ambiental — Senasa) provided the same services for 



93 



Paraguay: A Country Study 



smaller communities and also dealt with issues relating to national 
environmental health. By the mid-1980s, however, only 25 per- 
cent of the population had easy access to potable water. Like other 
health-related services, potable water was far more available in 
urban areas. About half the urban population had drinking water, 
whereas only 10 percent of rural residents did. Approximately half 
the population had access to sewage disposal services. 

Sanitary conditions were not adequate to ensure proper food 
storage and processing. The main sources of contamination were 
unpasteurized milk and meat products processed in poorly refriger- 
ated slaughterhouses. 

Housing was rudimentary in much of the country; some 80 per- 
cent of Paraguayan homes were owner-built. Flooding along the 
country's major rivers (Rio Paraguay, Rio Parana, and Rio Pil- 
comayo) and their tributaries in 1982 and 1983 destroyed much 
housing around Asuncion and other river cities. Many residents 
continued to live in ramshackle huts years after the floods. Provi- 
sion of services in such settlements was typically inadequate. The 
presence of rodents and insects represented a significant health risk. 

In the late 1980s, life expectancy at birth was sixty-nine years 
for females and sixty-five for males — an increase of two years 
for each sex from 1965 to 1986. General mortality was 6.6 per 
1,000 inhabitants in the mid-1980s (see table 6, Appendix). 
Experts projected the death rate to continue its decline to a low 
of approximately 5.2 per 1 ,000 inhabitants by the turn of the cen- 
tury. Heart and cerebrovascular diseases, diarrhea, cancer, and 
acute respiratory infections were the main causes of mortality among 
the population. The main infectious and parasitic diseases were 
malaria, Chagas' disease, diarrhea, and acute respiratory infec- 
tions. Rabies was the most damaging of diseases transmitted by 
animals. In late 1987 Paraguay reported a total of seven known 
cases of acquired immune deficiency syndrome (AIDS), which had 
resulted in four deaths. 

Although Paraguay recorded notable declines in its infant mor- 
tality rate (IMR) and postneonatal mortality rate in the early 1980s, 
significant regional disparities occurred. From 1981 to 1984, the 
IMR in Asuncion declined by more than 25 percent; in contrast, 
the drop was less than 15 percent in the rest of the country. The 
picture for postneonatal mortality was similar: the rate in the cap- 
ital declined by nearly 30 percent, whereas the rate for the rest of 
Paraguay fell only about 10 percent. 

Through the mid-1980s, diarrhea, pneumonia, and malnutri- 
tion remained the principal threats to the health of infants and chil- 
dren. Among infants the death rate from malnutrition was 1.6 per 



94 



Construction of a 
water treatment plant 
at Coronel Oviedo 
Courtesy 
Inter-American 
Development Bank 




1,000; nearly 10 percent of early childhood deaths were caused by 
nutritional deficiencies. 

In the late 1980s, Paraguay had a social security system that had 
been established and modified by laws in 1943, 1950, 1965, and 
1973. The system, administered by the Social Insurance Institute, 
offered old-age pensions, invalidity pensions, survivor settlements, 
sickness and maternity benefits, and work-injury benefits for tem- 
porary or permanent disabilities to employed persons and to self- 
employed workers who elected voluntary coverage. Railroad, bank- 
ing, and public employees had special systems. Both employers and 
employees contributed a percentage of salaries to fund the program. 
Employees generally contributed 9.5 percent of earnings (except, 
for example, pensioners who contributed only 5 percent, and 
teachers and professors, who contributed only 5.5 percent), 
employers 16.5 percent, and the government, 1.5 percent. The 
Social Insurance Institute operated its own clinics and hospitals 
to provide medical and maternal care. 

* * * 

In the late 1980s, there was a dearth of current, English-language 
studies on Paraguayan society. Elman R. and Helen S. Service's 
Tobati: Paraguayan Town, although dated (1954), contains valuable 
information on rural Paraguay. Paul H. Lewis provides useful data 



95 



Paraguay: A Country Study 



on contemporary social relations in Paraguay Under Stroessner. Guiller- 
mina Engelbrecht and Leroy Ortiz's "Guaranf Literacy in 
Paraguay" and Joan Rubin's National Bilingualism in Paraguay 
examine the role of the Guaranf language in national life. Fran 
Gillespie and Harley Browning's "The Effect of Emigration upon 
Socioeconomic Structure: The Case of Paraguay" deals with migra- 
tion and urbanization in Paraguay. David Maybury-Lewis and 
James Howe's The Indian Peoples of Paraguay: Their Plight and Their 
Prospects and Harriet Manelis Klein and Louisa R. Stark's "Indian 
Languages of the Paraguayan Chaco" provide an excellent over- 
view of the status of Indians. R. Andrew Nickson's "Brazilian 
Colonization of the Eastern Border Region of Paraguay," Calvin 
Redekop's Strangers Become Neighbors: Mennonite and Indigenous Rela- 
tions in the Paraguayan Chaco, and Norman R. Stewart's Japanese 
Colonization in Eastern Paraguay all describe the experience of some 
of Paraguay's immigrants. (For further information and complete 
citations, see Bibliography.) 



96 



A farmer sacks cotton for transport to market. 



Paraguay is a middle-income country that 

changed rapidly in the 1970s and 1980s as a result of hydroelectric 
development, agricultural colonization, construction, and cash crop 
exports. Nevertheless, the country's gross domestic product 
(GDP — see Glossary) in 1986 was approximately US$3.4 billion, 
or roughly US$1,000 per capita, ranking Paraguay only ahead of 
Bolivia among the Spanish- speaking countries of South America. 
Paraguay was the most agricultural economy of South America, 
and that sector influenced the performance of virtually every other 
sector of the economy. 

Traditionally isolated and underpopulated, Paraguay was one 
of the last countries in Latin America to enjoy the region's rapid 
growth in the post- World War II period. Paraguay entered a phase 
of sustained economic growth in the late 1950s. Its economy grew 
at the fastest pace of all the Latin American countries during most 
of the 1970s as the Paraguayan-Brazilian project, Itaipu, the world's 
largest hydroelectric plant, was constructed. During that decade, 
cotton and soybeans came to dominate agriculture, mostly as a result 
of high export prices and agricultural colonization. Paraguay's 
economy also was characterized by a large underground sector, 
in which smuggling and contraband had become normal features 
by the 1970s. 

The Paraguayan economic miracle of the 1970s came to a halt 
in 1982 because of the completion of construction at Itaipu, lower 
commodity prices for cotton and soybeans, and world recession. 
The economy recovered in 1984 and 1985, stagnated in 1986, and 
continued to expand in 1987 and 1988. Despite its rapid growth, 
the Paraguayan economy became increasingly dependent on soy- 
beans and cotton for exports and overall economic dynamism. These 
two crops, however, remained subject to external price fluctuations 
and local weather conditions, both of which varied considerably. 

Economic growth in the post-World War II period occurred in 
the context of political stability characterized by authoritarian rule 
and patronage politics. Government economic policies deviated little 
from 1954 to the late 1970s, consistently favoring a strong private- 
enterprise economy with a large role for foreign investment. Unlike 
most Latin American economies, in Paraguay import tariffs were 
generally low, fiscal deficits manageable, and exchange rates not 
overvalued. These trends faltered in the 1980s as the government 
took a more active part in industry, deficits rose, and the national 



99 



Paraguay: A Country Study 



currency was generally overvalued and devalued numerous times. 
Throughout the post- World War II era, Paraguay had no personal 
income tax, and government revenues as a percentage of GDP were 
among the lowest in the world. 

Despite the sustained economic growth that marked the post- 
war period, the distribution of economic benefits was highly ineq- 
uitable. Although GDP expanded rapidly in the 1970s, most 
economists estimated that income distribution worsened during the 
decade. Government spending on social services was particularly 
lacking. Paraguay's poverty was mostly a rural phenomenon, which 
increasingly involved competition for land in the eastern region 
near the Brazilian border, especially in the departments (adminis- 
trative divisions) of Alto Parana, Canendiyu, and Caaguazu (see 
fig. 1). Nonetheless, land tenure was not generally the acute social 
problem it was in many developing countries. 

Although Paraguay faced significant obstacles to future economic 
development, it displayed extraordinary potential. Paraguay con- 
tained little oil and no precious metals or sea coasts, but the coun- 
try was self-sufficient in many areas and was endowed with fertile 
land, dense forests, and swift rivers. The process of opening up 
the eastern border region to economic activity and continued 
agricultural expansion was expected to effect rapid changes in once- 
isolated Paraguay. Likewise, the development of a series of hydro- 
electric plants along the Rio Parana linked Paraguay to its neighbors 
and provided it access to cherished energy resources and badly need- 
ed export revenues. Finally, road construction united different 
departments of Paraguay and provided the country its first access 
to the Atlantic Ocean via Brazil. These processes of infrastructure 
development, hydroelectric expansion, agricultural colonization, 
and a cash crop explosion allowed Paraguay by the late 1980s to 
begin to tap its potential. 

Growth and Structure of the Economy 

Until the Spanish established Asuncion in 1537, economic activ- 
ity in Paraguay was limited to the subsistence agriculture of 
the Guaram Indians. The Spanish, however, found little of eco- 
nomic interest in their colony, which had no precious metals and 
no sea coasts. The typical feudal Spanish economic system did not 
dominate colonial Paraguay, although the encomienda system was 
established (see The Young Colony, ch. 1). Economic relations were 
distinguished by the reducciones (reductions or townships) that 
were established by Jesuit missionaries from the early seven- 
teenth century until the 1760s (see The Sword of the Word, 
ch. 1). The incorporation of Indians into these Jesuit agricultural 



100 



The Economy 



communes laid the foundation for an agriculture-based economy 
that survived in the late twentieth century. 

Three years after Paraguay overthrew Spanish authority and 
gained its independence, the country's economy was controlled 
by the autarchic policies of Jose Gaspar Rodriguez de Francia 
(1814-40), who closed the young nation's borders to virtually all 
international trade (see El Supremo Dictador, ch. 1). Landlocked, 
isolated, and underpopulated, Paraguay structured its economy 
around a centrally administered agricultural sector, extensive 
cattie grazing, and efficient shipbuilding and textile industries. After 
the demise of Francia, government policies focused on 
expanding international trade and stimulating economic develop- 
ment. The government built several roads and authorized British 
construction of a railroad. 

The War of the Triple Alliance (1865-70) fundamentally changed 
the Paraguayan economy (see The War of the Triple Alliance, ch. 
1). Economic resources were employed in and destroyed by the 
war effort. Paraguay was occupied by its enemies in 1870; the coun- 
tryside was in virtual ruin, the labor force was decimated, peasants 
were pushed into the environs of Asuncion from the east and south, 
and the modernization of the preceding three decades was undone. 
Sleepy, self-sufficient Paraguay, whose advances in agriculture and 
quality of life had been the envy of many in the Southern Cone 
(see Glossary), became the most backward nation in that subregion. 

To pay its substantial war debt, Paraguay sold large tracts of 
land to foreigners, mostly Argentines. These large land sales estab- 
lished the base of the present-day land tenure system, which is 
characterized by a skewed distribution of land. Unlike most of its 
neighbors, however, Paraguay's economy was controlled not by 
a traditional, landed elite, but by foreign companies. Many 
Paraguayans grew crops and worked as wage laborers on latifun- 
dios (large landholdings) typically owned by foreigners. 

The late 1800s and the early 1900s saw a slow rebuilding of ports, 
roads, the railroad, farms, cattle stock, and the labor force. The 
country was slowly being repopulated by former Brazilian 
soldiers who had fought in the War of the Triple Alliance, and 
Paraguay's government encouraged European immigration. 
Although few in number, British, German, Italian, and Spanish 
investors and farmers helped modernize the country. Argentine, 
Brazilian, and British companies in the late 1800s purchased some 
of Paraguay's best land and started the first large-scale produc- 
tion of agricultural goods for export. One Argentine company, 
whose owner had purchased 15 percent of the immense Chaco 
region, processed massive quantities of tannin, which were 



101 



Paraguay: A Country Study 

extracted from the bark of the Chaco's ubiquitous quebracho (break- 
axe) hardwood (see fig. 3). Large quantities of the extract were 
used by the region's thriving hide industry. Another focus of large- 
scale agro-processing was the yerba mate bush, whose leaves 
produced the potent tea that is the national beverage. Tobacco farm- 
ing also flourished. Beginning in 1904, foreign investment increased 
as a succession of Liberal Party (Partido Liberal) administrations 
in Paraguay maintained a staunch laissez-faire policy. 

The period of steady economic recovery came to an abrupt halt 
in 1932 as the country entered another devastating war. This time 
Paraguay fought Bolivia over possession of the Chaco and rumors 
of oil deposits. The war ended in 1935 after extensive human losses 
on both sides, and war veterans led the push for general social 
reform (see The Chaco War and the February Revolution, ch. 1). 
During the 1930s and 1940s, the state passed labor laws, imple- 
mented agrarian reform, and assumed a role in modernization, 
influenced in part by the leadership of Juan Domingo Peron in 
Argentina and Getulio Dornelles Vargas in Brazil. The 1940 con- 
stitution, for example, rejected the laissez-faire approach of previ- 
ous Liberal governments. Reformist policies, however, did not enjoy 
a consensus, and by 1947 the country had entered into a civil war, 
which in turn initiated a period of economic chaos that lasted until 
the mid-1950s. During this period, Paraguay experienced the worst 
inflation in all of Latin America, averaging over 100 percent 
annually in the 1950s. 

After centuries of isolation, two devastating regional wars, and 
a civil war, in 1954 Paraguay entered a period of prolonged politi- 
cal and economic stability under the authoritarian rule of Alfredo 
Stroessner Mattiauda. Stroessner's economic policies took a mid- 
dle course between social reform, desarrollismo (see Glossary), and 
laissez-faire, all in the context of patronage politics. Relative to 
previous governments, Stroessner took a fairly active role in the 
economy but reserved productive activities for the local and for- 
eign private sectors. The new government's primary economic task 
was to arrest the country's rampant and spiraling price instability. 
In 1955 Stroessner fired the country's finance minister, who was 
unwilling to implement reforms, and in 1956 accepted an Inter- 
national Monetary Fund (IMF — see Glossary) stabilization plan 
that abolished export duties, lowered import tariffs, restricted credit, 
devalued the currency, and implemented strict austerity measures. 
Although the sacrifice was high, the plan helped bring economic 
stability to Paraguay. Labor unions retaliated with a major strike 
in 1958, but the new government, now firmly established, quelled 



102 



The Economy 



the uprising and forced many labor leaders into exile; most of them 
remained there in the late 1980s. 

By the 1960s, the economy was on a path of modest but steady 
economic growth. Real GDP growth during the 1960s averaged 
4.2 percent a year, under the Latin American average of 5.7 per- 
cent but well ahead of the chaotic economy of the two previous 
decades. As part of the United States-sponsored Alliance for 
Progress, the government was encouraged to expand its planning 
apparatus for economic development. With assistance from the 
Organization of American States (OAS), the Inter- American 
Development Bank (IDB), and the United Nations Economic Com- 
mission for Latin America (ECLA), in 1962 Paraguay estab- 
lished the Technical Planning Secretariat (Secretaria Tecnica de 
Planificacion — STP), the major economic planning arm of the 
government. By 1965 the country had its first National Economic 
Plan, a two-year plan for 1965-66. This was followed by another 
two-year plan (1967-68) and then a series of five-year plans. Five- 
year plans — only general policy statements — were not typically 
adhered to or achieved and played a minimal role in Paraguay's 
economic growth and development. Compared with most Latin 
American countries, Paraguay had a small public sector. Free enter- 
prise dominated the economy, export promotion was favored over 
import substitution, agriculture continued to dominate industry, 
and the economy remained generally open to international trade 
and market mechanisms. 

In an economic sense, the 1970s constituted Paraguay's mira- 
cle decade. Real GDP grew at over 8 percent a year and exceeded 
10 percent from 1976 to 1981 — a faster growth rate than in any 
other economy in Latin America. Four coinciding developments 
accounted for Paraguay's rapid growth in the 1970s. The first was 
the completion of the road from Asuncion to Puerto Presidente 
Stroessner and to Brazilian seaports on the Atlantic, ending tradi- 
tional dependence on access through Argentina and opening the 
east to many for the first time. The second was the signing of the 
Treaty of Itaipu with Brazil in 1973. Beyond the obvious economic 
benefits of such a massive project, Itaipu helped to create a new 
mood of optimism in Paraguay about what a small, isolated coun- 
try could attain. The third event was land colonization, which 
resulted from the availability of land, the existence of economic 
opportunity, the increased price of crops, and the newly gained 
accessibility of the eastern border region. Finally, the skyrock- 
eting price of soybeans and cotton led farmers to quadruple the 
number of hectares planted with these two crops. As the 1970s 



103 



Paraguay: A Country Study 

progressed, soybeans and cotton came to dominate the country's 
employment, production, and exports. 

These developments shared responsibility for establishing thriving 
economic relations between Paraguay and the world's sixth larg- 
est economy, Brazil. Contraband trade became the dominant eco- 
nomic force on the border between the two countries, with Puerto 
Presidente Stroessner serving as the hub of such smuggling activi- 
ties. Observers contended that contraband was accepted by many 
Paraguayan government officials, some of whom were reputed to 
have benefited handsomely. Many urban dwellers' shelves were 
stocked with contraband luxury items. 

The Paraguayan government's emphasis on industrial activity 
increased noticeably in the 1970s. One of the most important com- 
ponents of the new industrial push was Law 550, also referred to 
as Law 550/75 or the Investment Promotion Law for Social and 
Economic Development. Law 550 opened Paraguay's doors even 
further to foreign investors by providing income-tax breaks, duty- 
free capital imports, and additional incentives for companies that 
invested in priority areas, especially the Chaco. Law 550 was suc- 
cessful. Investments by companies in the United States, Europe, 
and Japan comprised, according to some estimates, roughly a 
quarter of new investment. Industrial policies also encouraged the 
planning of more state-owned enterprises, including ones involved 
in producing ethanol, cement, and steel. 

Much of Paraguay's rural population, however, missed out on 
the economic development. Back roads remained inadequate, 
preventing peasants from bringing produce to markets. Social ser- 
vices, such as schools and clinics, were severely lacking. Few peo- 
ple in the countryside had access to potable water, electricity, bank 
credit, or public transportation. As in other economies that 
underwent rapid growth, income distribution was believed to have 
worsened in Paraguay during the 1970s in both relative and abso- 
lute terms. By far the greatest problem that the rural population 
faced, however, was competition for land. Multinational agribusi- 
nesses, Brazilian settlers, and waves of Paraguayan colonists rapidly 
increased the competition for land in the eastern border region. 
Those peasants who lacked proper titles to the lands they occupied 
were pushed to more marginal areas; as a result, an increasing num- 
ber of rural clashes occurred, including some with the government. 

In the beginning of the 1980s, the completion of the most 
important parts of the Itaipu project and the drop in commodity 
prices ended Paraguay's rapid economic growth. Real GDP 
declined by 2 percent in 1982 and by 3 percent in 1983. Paraguay's 
economic performance was also set back by world recession, poor 



104 



Selling perfume on the 
streets of Puerto 
Presidente Stroessner 
Courtesy Richard S. Sacks 




weather conditions, and growing political and economic instability 
in Brazil and Argentina. Inflation and unemployment increased. 
Weather conditions improved in 1984, and the economy enjoyed 
a modest recovery, growing by 3 percent in 1984 and by 4 percent 
in 1985. But in 1986 one of the century's worst droughts stag- 
nated the economy, permitting no real growth. The economy 
recovered once again in 1987 and 1988, growing between 3 and 
4 percent annually. Despite the economy's general expansion 
after 1983, however, inflation threatened its modest gains, as did 
serious fiscal and balance-of-payments deficits and the growing debt 
(see Balance of Payments and Debt, this ch.). 

Economic Policy 
Fiscal Policy 

In the 1970s, the government pursued cautious fiscal policies and 
achieved large surpluses on the national accounts, mainly as a result 
of the vibrant growth in the second half of the decade. By the 
early 1980s, there were growing demands for increased govern- 
ment expenditure for social programs. By 1983, the first fiscal year 
(see Glossary) of increased government spending and the first full 
year of a recession, the government had entered into a significant 
fiscal crisis as the budget deficit reached nearly 5 percent of GDP 
(the deficit had been only 1 percent of GDP in 1980). In 1984 the 



105 



Paraguay: A Country Study 

government imposed austere measures to remedy national accounts. 
Cuts in current expenditures curtailed already meager social and 
economic programs. In addition, from 1983 to 1986, real wages 
of government employees were allowed to drop by 37 percent. Cap- 
ital expenditures were cut back more seriously. Capital expendi- 
tures as a percentage of total expenditure dropped from 3 1 percent 
in 1984 to 10 percent by 1986. Austerity measures were successful 
in economic terms, and by 1986 budget deficits were under 1 per- 
cent of GDP. In 1986 the government announced a high-profile 
Adjustment Plan, which continued previous policies of expendi- 
ture cutbacks but also proposed more structural changes in fiscal 
and monetary policies. The most prominent of these was a proposal 
for the country's first personal income tax. Many observers charac- 
terized the plan as mainly rhetorical, however, citing the govern- 
ment's lack of political will to implement many of its proposals. 

Despite the government's ability to control budgetary matters, 
fiscal policy faced two new and growing problems in the 1980s. 
The first was the poor financial performance of state-owned 
enterprises. The overall public-sector deficit, which reached 7 per- 
cent of GDP in 1986, had swelled in part because of the high oper- 
ating costs of parastatals (state-owned enterprises), which accounted 
for 44 percent of the overall deficit in 1986. Rather than continu- 
ally increasing the price of utilities and the services of parastatals, 
the government accepted the loss to avoid the inflationary pres- 
sures of increasing costs to consumers. This policy, however, was 
seen by critics as only a stopgap measure, short of more painful 
structural solutions, such as examining the financial viability of 
certain parastatals. The second growing fiscal problem in the 1980s 
directly involved the country's complex exchange-rate system. 
Created in July 1982, the multitiered system allowed a preferen- 
tial exchange rate for the imports of certain government-owned 
companies. It was the Central Bank, however, that forfeited the 
losses involved in these exchange transactions, which were recorded 
as part of the overall public-sector deficit. In 1986 Central Bank 
losses of this kind accounted for nearly half of all the public sec- 
tor's deficit. Again to avoid inflation, the government chose to main- 
tain the multitiered system, at least in the short run. 

Expenditures 

Government expenditures in 1986 reached only 8 percent of 
GDP, a very low figure compared with those for many devel- 
oping countries where state expenditures accounted for a third 
of GDP or more. Expenditures were separated into current and 
capital accounts. As a result of large fiscal deficits, mostly caused 



106 



The Economy 



by parastatals, fiscal policy in the 1980s sought to cut public 
expenditures, primarily capital expenditures. The extremely sharp 
decline in capital expenditures in 1986 brought capital investment 
to less than 1 percent of GDP, a dangerously low level according 
to many economists. This decline signified that Paraguay was 
sacrificing long-term development for short-term corrections. 

The two major segments of the current account were govern- 
ment salaries (39 percent) and subsidies and transfers (24 percent). 
Defense spending represented an additional 10 percent of total 
government expenditures (see Defense Spending, ch. 5). Unilateral 
transfers to individuals for social services were minimal, and the 
country's social security program, which served only one-fifth of 
the population, was essentially self-financed by workers and em- 
ployers. Interest payments on the country's mounting debt, 4 per- 
cent of current expenditures in 1980, doubled to 8 percent by 1986. 
Most capital expenditures in the 1980s went toward state-owned 
enterprises. Other major infrastructural projects and development 
finance institutions absorbed the balance in widely varying per- 
centages depending on the given year. 

Revenues 

The most striking feature of fiscal policy in Paraguay, and the 
best empirical evidence of the limited role of the government in 
the economy, was the level of government revenues as a percen- 
tage of GDP. Revenues in 1986 equalled slightly less than 8 per- 
cent of GDP, the lowest rate in Latin America and one of the lowest 
in the world. Tax revenues represented 87 percent of total revenues 
in 1986 and came from taxes on goods and services (32 percent), 
net income and profits of managers and corporations (15 percent), 
international trade, mainly imports (14 percent), and real estate 
(11 percent). The remaining 28 percent came from a variety of 
other sources, including stamp taxes. Paraguay had no personal 
income tax, state tax, or local taxes. Nontax revenues, which 
included profits from parastatals, represented the remaining 13 per- 
cent of total revenues. Although revenues were greater than 
expenditures in 1986, there was a small budget deficit as a conse- 
quence of certain exchange-rate adjustments. 

The tax system was a focus of great concern. Generally outdated, 
it had become increasingly inefficient through numerous ad hoc 
additions to the tax code over the years. The tax system, headed 
by the Income Tax Bureau, also was difficult to administer, suffered 
from low collection rates, and was organizationally complex. For 
example, the system comprised four autonomous collection 
agencies whose boundaries were not always clear. Another of the 



107 



Paraguay: A Country Study 

system's fundamental drawbacks was its lack of practical taxes, such 
as a personal income tax, through which the government could sys- 
tematically capture tax revenues. More important, the lack of tax 
revenues limited the government's ability to undertake public works 
and provide social services. Paraguay was perhaps the only coun- 
try in Latin America whose government received encouragement 
from the major multilateral lenders — the IMF, the World Bank 
(see Glossary), and the IDB — to increase its taxes. As part of the 
1986 Adjustment Plan, the government proposed a progressive per- 
sonal income tax, a value-added tax, and some administrative 
reshuffling of the tax administration. In 1988, however, it was still 
unclear whether these policies would be enacted or had been pro- 
posed merely for political effect. 

Monetary Policy 

In 1943 the guaram (see Glossary) replaced the gold peso (which 
had been pegged to the Argentine peso) as the national currency, 
laying the foundation for the country's contemporary monetary 
system. Guarames are issued exclusively by the Central Bank 
(Banco Central) in notes of 1, 10, 100, 500, 1,000, 5,000 and 10,000 
and as coins of 1, 5, 10, and 50 guarames. One guaram is worth 
100 centimos. 

Changes in banking laws in the 1940s set the stage for the crea- 
tion of the country's new Central Bank, which was established in 
1952, replacing the Bank of Paraguay and the earlier Bank of the 
Republic. As the center of the financial system, the Central Bank 
was charged with regulating credit, promoting economic activity, 
controlling inflation, and issuing currency. As a result of the growth 
in the financial system, a new general banking law was introduced 
in 1973, authorizing greater Central Bank regulation of commer- 
cial banks, mortgage banks, investment banks, savings and loans, 
finance companies, and development finance institutions, among 
others. In 1979 the Central Bank also began to regulate the nation's 
growing capital markets. 

The Central Bank also controlled monetary policy. One of the 
major aims of monetary policy in the 1980s was price stability. After 
experiencing extreme price instability — a familiar threat to the eco- 
nomies of the Southern Cone — in the 1940s and 1950s, Paraguay 
entered into two decades of price stability, credit expansion, eco- 
nomic growth, and a stable exchange rate. Inflation was only 38 
percent in the 1960s, a dramatic turnaround from the 1,387-percent 
figure recorded during the previous decade. Although the rate 
climbed to 240 percent in the 1970s, it remained far below the post- 
war level. The pace of inflation accelerated in the 1980s, however, 



108 



Street markets in Asuncion 
Courtesy Tim Merrill 



Paraguay: A Country Study 

after the economic downtown in 1982. Inflation, as measured by 
Paraguay's consumer price index, reached an annual rate of 27 
percent in 1986 and climbed to well over 30 percent in 1987. 
Government authorities wrestled with how to control inflation 
without implementing policies that could unleash even greater 
inflation and popular discontent. Although influenced by many fac- 
tors, inflation in the 1980s was exacerbated by fiscal deficits, 
exchange-rate losses of the Central Bank, the exchange-rate sys- 
tem in general, the country's declining terms of trade, and the 
inflation of neighboring trading partners, Brazil and Argentina. 

The Central Bank regulated the allocation of credit, the supply 
of credit, and the country's interest rate in an attempt to promote 
economic growth and restrain inflation. The Central Bank held 
considerable control over the national banking system, but many 
regulations were loosely enforced. 

Exchange-Rate Policy 

From 1960 to 1982, Paraguay enjoyed extraordinary exchange- 
rate stability as the guarani remained pegged to the United States 
dollar at G126=US$1. After the virtual financial chaos of 1947-54, 
this stability was especially welcome in Paraguay. Although the 
country's exchange rate was overvalued in the 1970s, it was not 
until the 1982 recession that the government devalued the guarani. 

Exchange-rate policy in the 1980s came to be characterized by 
numerous devaluations and almost annual changes in the number 
of exchange rates employed. In early 1988 five exchange rates were 
in use, making exchange-rate policy very complicated. The first 
rate of (S240=US$1 was used for the imports of certain state-owned 
enterprises and for external debt service payments. The second rate 
of (S-320=US$1 was applied to petroleum imports and petroleum 
derivatives. The third rate of (S400=US$1 was reserved for dis- 
bursements of loans to the public sector. The fourth rate of 
C550=US$1 was used for agricultural inputs and most exports. 
The fifth rate, the only one not set by the Central Bank, was a 
free-market rate set by the commercial banks. The free-market rate, 
which was applied to most of the private sector's nonoil imports, 
exceeded (S900=US$1 by 1988. Exchange-rate adjustments were 
expected to continue in the late 1980s. 

One of the most distinctive and complex features of the nation's 
exchange-rate policy was a system of official minimum export prices 
for selected agricultural commodities. The system, called Aforo, 
was essentially a way of guaranteeing foreign-exchange earnings 
to the Central Bank. Aforo values, assessed by the government 
immediately before a harvest or slaughter, designated the minimum 



110 



The Economy 



prices exporters should receive for the goods and determined what 
percentage of foreign-exchange earnings must be turned over to 
the Central Bank. The difference between the Aforo price and the 
actual price was traded in the free-exchange market. In 1987 the 
official export rate for Aforos was (&550=US$1, whereas the free- 
market rate was upwards of (S-900=US$1 . Lower Aforos generally 
made Paraguayan exporters more competitive but guaranteed less 
revenue to the Central Bank. Aforos were one of several govern- 
ment policies that fueled contraband trading. 

As the manipulation of Aforos demonstrated, exchange-rate 
policy was an important economic policy tool of the Paraguayan 
government and directly affected most sectors of the economy. 
Although the government ostensibly intended to reduce the gaps 
among the various tiers of the exchange rate, it was reluctant to 
reunify the rates in fear of greatly speeding inflation. Paradoxically, 
however, the multitiered exchange-rate system increased inflation- 
ary pressures in numerous indirect ways. One of its most impor- 
tant effects was the fall in Central Bank reserves associated with 
the exchange-rate subsidies for parastatals, a policy that created 
a growing public-sector deficit. Likewise, Central Bank losses 
encouraged a more expansionary monetary policy, most notably 
through rediscounting rates. An overvalued exchange rate also ham- 
pered export growth in general, which in turn aggravated Para- 
guay's balance-of-payments deficits and potentially its external debt. 

Labor 

Paraguay's labor force surpassed 1.4 million in 1986, or approx- 
imately 37 percent of the country's estimated population. Govern- 
ment statistics recorded an unemployment rate of 14 percent in 
1986, but that figure dropped to 8 percent in 1987. Estimates 
of unemployment varied widely outside Paraguayan government 
circles. For example, the United Nations Economic Commission 
for Latin America and the Caribbean (ECLAC) estimated unem- 
ployment as high as 18 percent in 1986 with as much as 50 per- 
cent underemployment in urban areas. Males dominated the official 
labor force, accounting for 79 percent of registered workers. Women 
were visibly a much higher percentage of the work force than 
official statistics reflected. But, unlike in most Latin American 
countries, Paraguay's female labor force was not growing fas- 
ter than the male labor force; males were expected to continue 
to constitute a disproportionate share of the labor force for some 
time to come. 

Statistics on the distribution of labor by economic sector in 1987 
showed 48 percent of workers in agriculture, 31 percent in services, 



111 



Paraguay: A Country Study 



and 21 percent in industry. Males dominated agricultural labor, 
whereas women were most prominent in the services sector. The 
country maintained the highest percentage of labor in agriculture 
in all of South America and one of the lowest services percentages 
on the continent. Nevertheless, according to data from the IDB, 
a large portion of the labor force in Asuncion was in the informal 
sector (see Glossary), generally in services. In fact, Asuncion ranked 
second among Latin American cities in the percentage of labor force 
in the informal sector. 

Unlike most Latin American countries, the distribution of 
Paraguay's labor force had changed little in thirty-five years. In 
1950 agriculture comprised 55 percent of the labor force, services 
25 percent, and industry 20 percent. The greatest fluctuations within 
economic sectors during the 1980s occurred in the construction 
industry, which was directiy affected by hydroelectric development. 
After the end of Itaipu's construction phase in the early 1980s, 
observers estimated that the number of construction workers 
dropped from 100,000 to 25,000, but they expected that the 
start-up of construction at the Yacyreta hydroelectric project would 
restore many of those jobs. 

Comprehensive labor laws had been passed since 1961 , but they 
were not universally enforced. Laws theoretically regulated maxi- 
mum hours to be worked per week, child labor, union activities, 
female labor, maternity leave, holidays, and social security and 
established a minimum wage. Minimum wages, in effect since 1974, 
were set by the Labor Authority according to geographic location 
and task performed. Minimum wages in the 1970s and 1980s did 
not keep pace with inflation, and the real minimum wage was erod- 
ing. The real wages of the work force at large, however, eroded 
even more quickly than minimum wages over the same period. 
Employees typically worked from 6:00 A.M. to 8:00 P.M. with an 
almost universal midday siesta. 

Organized labor provided the best example of the loose enforce- 
ment of labor laws. Although the country's labor laws permitted 
free association by labor unions, most labor movements had been 
thwarted by the government since 1958, the year of a major strike 
by the Paraguayan Confederation of Workers (Confederacion 
Paraguaya de Trabajadores — CPT). There was a growing indepen- 
dent workers' movement developing in the 1980s, which was fueled 
mostly by dissatisfaction with the declining real wage of the 
Paraguayan worker. Nonetheless, unionized labor remained domi- 
nated by the CPT, which was generally more progovernment than 
prolabor and rarely challenged government policy (see Interest 
Groups, ch. 4). 



112 



The Economy 



Agriculture 

Throughout Paraguay's history, agriculture has been the main- 
stay of the economy. This trend continued unabated in the late 
1980s as the agricultural sector generally accounted for 48 percent 
of the nation's employment, 23 percent of GDP, and 98 percent 
of export earnings (see fig. 6). The sector comprised a strong food 
and cash crop base, a large livestock subsector, and a vibrant tim- 
ber industry. 

Growth in agriculture was very rapid from the early 1970s to 
the early 1980s, a period when cotton and soybean prices soared 
and cropland under cultivation expanded as a result of agricultural 
colonization. Growth in agriculture slowed from an average of 7.5 
percent annual growth in the 1970s to approximately 3.5 percent 
in the mid- to late 1980s. Agricultural output was routinely affected 
by weather conditions. Flooding in 1982 and 1983 and severe 
droughts in 1986 hurt not only agriculture, but, because of the key 
role of the sector, virtually every other sector of the economy as well. 

In the aggregate, however, the advances experienced by the sector 
during the 1970s and 1980s did not reach many of the small farm- 
ers, who continued to use traditional farming methods and lived 
at a subsistence level. Despite the abundance of land, the distribu- 
tion of the country's farmlands remained highly skewed, favoring 
large farms. Epitomizing the country's economic activity in general, 
the agricultural sector was consolidating its quick expansion over 
the two previous decades and only beginning to tap its potential 
in the late 1980s. 

Land Tenure 

The history of land tenure in Paraguay is distinct from that in 
most Latin American countries. Although there had been a sys- 
tem of land grants to conquistadors, Paraguay was distinguished 
by Jesuit reducciones that dominated rural life for over a century. 
After the expulsion of the Jesuits in 1767 and later the Spanish, 
the state had become the owner of 60 percent of the country's land 
by the mid- 1800s. Large tracts of land were sold, mostly to 
Argentines to pay the country's war debt from the War of the Tri- 
ple Alliance. This was the beginning of the concentration of land 
in Paraguay not in the hands of the Spanish or of a local elite but 
rather of foreign investors. Land policy remained controversial until 
the 1930s, when there was a broader consensus for the titling of 
land to users of the land and mediating between latifundio and 
minifundio (small landholding). After 1954 multinational agribusi- 
nesses, mostly Brazilian and American, played an increasing role 



113 



Paraguay: A Country Study 



FY 1986 - GDP US$3.4 billion (approximate) 




Other Services 
16.4% ^ 



Agriculture, Forestry, 
. and Fishing 
Ik 23.3% 



Mining 0.4% 



Manufacturing 
16.3% 



^< dfiS^ A 3 ^^Construction 5.9% 

Transportation and Communications Electricity, Gas, and Water 
4.6% 2.8% 



Source: Based on information from Economist Intelligence Unit, Country Report: Uruguay, 
Paraguay, No. 3, London, 1988, 3. 

Figure 6. Gross Domestic Product (GDP) by Sector, 1986 

in the economy, often purchasing enormous tracts of land devoted 
to raising cattle, cotton, soybeans, and timber. 

The most recent data on land tenure was the agricultural cen- 
sus of 1981, which followed earlier major agricultural censuses of 
1956 and 1961. The most striking change from 1956 to 1981 was 
the kind of ownership of the farms. In the 1956 census, 49 percent 
of all farmers squatted on their land compared with only 30 per- 
cent in the 1981 census. This data suggested an increasing interest 
on the part of small farmers in obtaining title to their land in the 
face of growing land pressures. The 1981 census also indicated that 
58 percent of all farms were owned outright and 15 percent were 
sharecropper farms; the 1956 census showed that 39 percent of farms 
belonged to farmers and 12 percent were worked by sharecroppers. 

Another striking element of the 1981 agricultural census was the 
great disparity between small and large landholdings. According 
to the census, 1 percent of the nation's more than 273,000 farms 
covered 79 percent of the nation's farmland in use. These large 
farms had an average landholding of almost 7,300 hectares. Many 
of the largest holdings were cattle farms in the Chaco region. By 
contrast, the smallest farms, which made up 35 percent of all farms, 
covered only 1 percent of the land, making the average size of a 
minifundio 1.7 hectares, or less than was necessary for one family's 
subsistence. Still, the 1981 census figures were somewhat more 



114 



The Economy 



encouraging than those in the 1956 census, which showed that 
1 percent of farms covered 87 percent of the land, and 46 percent 
of farms covered only 1 percent of the farmland. Another encourag- 
ing trend that the census quantified was the declining number of 
farms under 5 hectares in size and the growth of small to medium- 
size farms (5 to 99.9 hectares). 

Despite these positive trends, the 1981 census pointed to an 
increasing problem of landlessness. Census figures indicated that 
roughly 14 percent of all peasants were landless. Landlessness histor- 
ically had been mitigated by the undeveloped nature of the eastern 
border region. Because the owners of estates in the region used 
only a portion of their holdings, peasants could squat on the proper- 
ties without retribution. Land pressures also were alleviated by the 
vast tracts of untitled land in the east. Beginning in the 1960s, 
however, competition for land in the area increased dramatically. 
Many estate owners sold their lands to agribusinesses; the new 
proprietors, who were committed to an efficient and extensive use 
of their holdings, sometimes called upon the government to remove 
squatters from the lands. 

Squatters also came into competition with Paraguayan colonists 
and Brazilian immigrants. Thousands of colonists were resettled 
in the eastern region under the government's agrarian reform pro- 
gram (see Land Reform and Land Policy, this ch.). The Brazilian 
immigration occurred as a result of a dramatic increase in land 
prices in the 1970s in the neighboring Brazilian state of Parana. 
Many farmers sold their properties and crossed into Paraguay, 
where land was much cheaper. By the late 1980s, at least half of 
the population in the departments of Canendiyu and Alto Parana 
was Brazilian. 

Land Reform and Land Policy 

After decades of public controversy over government land policy, 
two important agrarian laws were enacted in 1963 that guided land 
policy through the late 1980s. The Agrarian Statute, as the laws 
were called, limited the maximum size of a single landholding to 
10,000 hectares in Eastern Paraguay and 20,000 hectares in the 
Chaco, with landholdings in excess of this size subject to taxes or 
possible purchase. This law, however, like many of the laws involved 
in economic policy, was enforced only loosely or not at all. A more 
fundamental component of the Agrarian Statute was the creation 
of the Rural Welfare Institute (Instituto de Bienestar Rural — IBR). 
The IBR, which superceded the Agrarian Reform Institute, became 
the central government agency mandated to plan colonization pro- 
grams, issue land titles to farmers, and provide new colonies with 



115 



Paraguay: A Country Study 



support services such as credit, markets, roads, technical assistance, 
and other social services as available. From 1963 to the late 1980s, 
the IBR titled millions of hectares of land and created hundreds 
of colonies, directly affecting the circumstances of roughly one- 
quarter of the population. In the late 1980s, the IBR remained the 
key government agency, along with the Ministry of Agriculture 
and Livestock, in serving the land needs of small farmers. 

Although the IBR played an important role in stimulating the 
celebrated "March to the East," the exodus from Paraguay's central 
zone to the eastern border region that began in the 1960s was a 
spontaneous process. The task of the IBR was so enormous and 
its resources so limited that many of the country's farmers bypassed 
the institute in order to participate in the eastward land grab. Thou- 
sands of Paraguayans took it upon themselves to trek eastward to 
the abundant, fertile, but forested land of Alto Parana, Itapua, and 
other eastern departments. Many of the colonists were pioneers 
in the truest sense, clearing densely forested areas for farming mostly 
by axe. Few farmers had access to institutional credit, and these 
newly colonized areas generally lacked schools, roads, and other 
amenities. 

Land Use 

Paraguay comprises a total of 40.6 million hectares of land. But 
based on soil surveys, analysts have estimated that only one- 
fifth of that area is appropriate for normal crop production. 
According to the 1981 agricultural census, 7 percent of the land 
was dedicated to crop production, 20 percent to forestry, 26 per- 
cent to livestock, and 47 percent to other purposes. These figures 
indicated the great agricultural potential that remained in Paraguay 
in the late 1980s. One of the most important trends in Para- 
guayan agriculture was the increase in the percentage of land 
under cultivation, which had been only 2 percent in 1956. Livestock 
activity fluctuated greatly during the 1970s and 1980s but gener- 
ally had increased, rising above the 2 2 -percent land use reported 
in 1956. The improved utilization of agricultural resources resulted 
from increased colonization, favorable price movements for cash 
crops, further mechanization, and infrastructural improvements 
connecting produce with markets. 

For agricultural purposes, the country can be divided into 
three regions: the Chaco, the central region, and the eastern region. 
The semiarid Chaco contained extensive grazing land that sup- 
ported 40 percent of the country's livestock. Although the Chaco 
region covered 60 percent of the country's land mass, it contained 
only 3 percent of the population and accounted for less than 2 



116 



A farmer in Paraguari holding a sample of his watermelon crop 
Courtesy Inter-American Development Bank 

percent of crop production. With the exception of the Mennonite 
colonies in the central Chaco, there was little crop activity (see 
Minority Groups, ch. 2). A more suitable location for crops was 
the central region in the vicinity of Asuncion, where traditional 
crop production had dominated since peasants were pushed toward 
the capital at the end of the War of the Triple Alliance. But govern- 
ment policies since the 1960s had favored breaking up minifundios 
in the central region and establishing larger, more efficient farms 
in the fertile eastern border region, which is endowed with rich, 
varied soils, well distributed annual rainfalls, and millions of hect- 
ares of hardwood forests. Together these regions cover some 16 
million hectares, 40 percent of the country's land and approximately 
98 percent of the country's crop land. Agricultural surveys in the 
east, the new focus of agricultural activity, have determined that 
30 percent of the region is suitable for intensive agriculture, 40 
percent for livestock, 20 percent for moderate agriculture or livestock 
use, and 10 percent for forestry. 

The country's land use changed rapidly in the 1970s and 1980s 
as foreign investment, Paraguayan and Brazilian colonists, the con- 
struction of Itaipu, favorable commodity prices, and new infra- 
structure all contributed to the penetration of the dense eastern 
region. Increased prices for soybeans and cotton beginning in the 
early 1970s changed the Paraguayan landscape more drastically 



117 



Paraguay: A Country Study 

than any other factor. By the late 1980s, cotton and soybeans 
accounted for over 1.1 million hectares, or over 40 percent of all 
land in crops and contributed over 60 percent of exports. Although 
government policies favored export crops, the rapid expansion of 
cash crops was largely a direct response that Paraguay's free-market 
economy made to the rise in the international demand for these 
products. 

Crops 

Export Crops 

Soybeans had replaced cotton as the country's most important 
crop by the 1980s. A relatively new crop for Paraguay, soybeans 
were not produced in any quantity until 1967, when they were 
introduced as the summer rotation crop in a national plan for self- 
sufficiency in wheat. After soybean prices nearly tripled in 1973, 
however, much of the land slated for wheat was sown with soy- 
beans instead. As the lucrative nature of soybean cultivation and 
processing became apparent, several large agribusinesses from 
Brazil, the United States, and Italy engaged in large-scale, com- 
mercial production of soybeans and soybean oil. It is difficult to 
exaggerate the drastic growth soybeans enjoyed in Paraguay. In 
1970 soybeans covered only 54,600 hectares and had an annual 
production of over 75,000 tons. By 1987 soybeans covered some 
718,800 hectares, more than any other crop, with an annual out- 
put of 1 million tons and export revenues of approximately US$150 
million. The soybean crop grew primarily in the newly colonized 
departments of Itapua, Alto Parana, Canendiyu, and Amambay. 
Soybeans were produced principally for the world market and sold 
both as a raw bean and as a processed oil, which was also con- 
sumed locally. Soybean prices generally rose beginning in the 1970s 
but experienced significant fluctuations in the early to mid-1980s 
before recovering in the late 1980s. The major constraint on growth 
in soybean output, besides price fluctuations, was the lack of storage, 
drying facilities, and local processing capacity. 

Cotton was one of Paraguay's oldest crops, grown since the time 
of the Jesuit missions. The government encouraged cotton produc- 
tion after the crop was nearly wiped out by the War of the Triple 
Alliance. Cotton was especially suited to the Paraguayan climate 
and soils and was grown primarily by small farmers in the central 
region. Cotton farming also experienced extremely rapid growth 
in the 1970s and 1980s. In 1970 only 46,900 hectares were sown 
with cotton, producing a volume of over 37,000 tons. By 1985, 
however, 385,900 hectares were covered with cotton, yielding 



118 



The Economy 



almost 159,000 tons. Those figures had dropped to 275,000 hect- 
ares and 84,000 tons during the drought of 1986. Foreign-owned, 
large-scale, commercial production in the eastern border region 
was surpassing central region production in the late 1980s. Despite 
the advances in cotton production, cotton cultivation in the 1980s 
was still characterized by low yields and a low technological level. 
Even more so than soybeans, cotton suffered wide price fluctua- 
tions, and many small farmers who came to rely on cotton revenues 
in the 1970s became vulnerable to external price fluctuations in 
the following decade. Some cotton fiber was used domestically, but 
about 80 percent of the country's crop was processed into cotton 
lint at more than ten textile-processing factories. Cotton exports 
in 1987 earned about US$100 million, with most exports going 
to Uruguay, Britain, France, the Federal Republic of Germany 
(West Germany), and Japan. 

Another key export crop was tobacco. Used domestically for cen- 
turies, cigarettes and cigars also earned foreign exchange. During 
parts of the early 1900s, tobacco was Paraguay's principal agricul- 
tural export to Western Europe. Tobacco production slowed in the 
1970s with the advent of massive soybean and cotton production. 
Another reason for the tobacco crop's decline was the inability of 
the domestic cigarette factories to improve quality control and com- 
pete with smuggled brands. Wide price fluctuations of tobacco also 
explained dwindling production. Despite these difficulties, tobacco 
made a slight recovery in the 1980s. The area cultivated rose from 
7,600 hectares in 1980 to over 8,000 hectares in 1987. Output in- 
creased from 1 1 ,500 to 12,000 tons. Tobacco was grown through- 
out Paraguay, mostiy by small farmers. Cigarettes and cigars were 
exported to Argentina, France, and Spain. Tobacco exports were 
valued at approximately US$9 million in 1987. 

Coffee was another export crop but of much less importance. 
Cultivated since the times of the Jesuits, coffee was grown in the 
central and eastern border regions for local and export markets. 
Most modern coffee production methods derived from the prac- 
tices of German colonists in the eastern region. Coffee production 
boomed in the late 1970s but waned in the early 1980s. In the late 
1980s, coffee output rose again, following a pattern of fluctuating 
production based on price movements. In 1987 approximately 9.2 
million hectares of coffee yielded 18.4 million tons of exports with 
an estimated value of US$44.7 million. 

Sugarcane remained an important cash crop for small farmers 
in the late 1980s. Unlike many countries in the Western 
Hemisphere, Paraguay saw sugarcane as a crop of the future, not 
because of its use for refined sugar and molasses, but as an input 



119 



Paraguay: A Country Study 



to ethanol, an increasingly popular energy alternative for the coun- 
try. Sugarcane was planted in Paraguay as early as 1549 with seed- 
lings from Peru, and sugar had been exported since 1556. After 
the devastation of Paraguay's two major wars, however, local output 
did not meet domestic demand until the mid- 1900s, after which 
exports were revived. Since then, sugar production has fluctuated 
with price changes but generally has increased. Paraguay's climate 
is appropriate for sugarcane cultivation, but traditional methods 
and inefficient small-scale production limited harvests. Besides low 
yields, the industry suffered from outdated milling facilities and 
high production costs. Sugar production, however, was expected 
to be modernized and increasingly commercialized as a result of 
its high government priority as an input to an alternative energy 
source. Some 65,000 hectares of sugarcane produced 3.2 million 
tons of sugar in 1987, including 7,500 tons of sugar exports valued 
at US$2.3 million. These figures were highs for the decade. 

Numerous crops were grown partially or entirely for their value 
as exported processed oils. Oilseeds represented one of Paraguay's 
largest agro- industries. One of Latin America's largest oilseed 
exporters, Paraguay processed cottonseed, soybean, peanut, coco- 
nut, palm, castor bean, flaxseed, and sunflower- seed oils. Indus- 
trial countries in particular consumed oilseeds as a lower-priced 
substitute for more traditional oils, which also were higher in 
cholesterol. Some oil was used locally as well. Paraguay also 
produced a number of nonvegetable oils, such as tung oil and petit- 
grain oil. Tung oil, derived from tung nuts, was used as a drying 
agent in paints. Petit- grain oil, derived from Paraguay's bitter 
oranges, was used in cosmetics, soaps, perfumes, and flavorings. 
In the 1980s Paraguay remained one of the world's leading exporters 
of petit- grain oil. 

Food Crops 

Manioc (cassava), corn, beans, and peanuts, the four basic crops 
of the Guaram Indians, were still the country's major food crops 
in the 1980s. Manioc, the staple of the Paraguayan diet, had been 
cultivated in nearly every area of the country for centuries. Called 
mandioca in Paraguay, the root crop was the main starch of the diet. 
Manioc did not experience the rapid explosion of cultivation that 
cotton, soybean, and corn did. Nevertheless, manioc yields ranked 
as some of the best in Latin America. In 1986 about 220,000 hect- 
ares produced 3.4 million tons of manioc. These figures compared 
favorably with 1976 data, which recorded 106,500 hectares produc- 
ing 1.6 million tons. 



120 



The Economy 



Corn was Paraguay's most rapidly growing food crop. From the 
early 1960s to the late 1980s, corn output multiplied rapidly, cover- 
ing more hectares than any crop except soybeans. After the dou- 
bling of both hectares cultivated and total output in the 1970s, corn 
production accelerated even further in the 1980s, mostly because 
of continued agricultural colonization. In 1980 approximately 
376,600 hectares yielded 584,700 tons of corn, compared with an 
unprecedented 547,000 hectares of corn in 1987, which harvested 
917,00 tons. Like manioc, corn was grown throughout the coun- 
try, but the departments of Itapua, Paraguarf, Caaguazu, and Alto 
Parana were responsible for most of the harvest. White corn 
was the traditional corn of Paraguay, but yellow, high-yield hybrids 
were increasingly common, especially on larger farms. Most corn 
went to domestic human consumption; roughly a third of domes- 
tic corn consumption took place in the form of feed grain for 
the livestock sector. In addition, some surplus corn was exported 
to Brazil and Argentina, depending on weather conditions and 
annual output. 

Other principal food crops included beans, peanuts, sorghum, 
sweet potatoes, and rice. Many types of beans were grown in 
Paraguay, including lima beans, green beans, and peas. Since the 
1970s, however, bean production had been declining because of 
the profitability of other crops. Peanuts, a traditional though mar- 
ginal crop, expanded in the 1970s and 1980s and often were inter- 
cropped with cotton. Peanuts also were processed as an oilseed. 
Sorghum, a drought-resistant crop, was grown primarily as feed 
for livestock and was considered a potential crop for the arid Alto 
Chaco. Sweet potatoes, another main staple crop, like many other 
food crops, did not expand significantly in the 1970s, and harvests 
contracted measurably in the 1980s. Rice production, by contrast, 
expanded after high-yield varieties were introduced in the 1960s. 
Rice is not a dietary staple in Paraguay as it is in many Latin Ameri- 
can countries, but it is popular and consumed in ever- greater quan- 
tities. Self-sufficient in rice, Paraguay showed potential as a regional 
exporter because of its rich soils and irrigation potential along the 
Rio Parana. 

After attempting for twenty years to become self-sufficient in 
wheat production, Paraguay reached wheat self-sufficiency in 1986. 
For two decades, the government's national wheat program had 
encountered numerous obstacles: seeds inappropriate for Paraguay's 
climate, skyrocketing prices for alternative crops, poor weather, 
blight infection, and a lack of proper farming practices. From 1976 
to 1986, however, the number of hectares covered with wheat mul- 
tiplied some sixfold, from 24,200 to over 140,000. Wheat output 



121 



Paraguay: A Country Study 

reached 233,000 tons in 1986, 33,000 tons above national consump- 
tion. In 1987 approximately 175,000 hectares of wheat fields yielded 
270,000 tons, a record high. Over half of all wheat was grown in 
Itapua, where most soil testing, tractors, and fertilizers were used. 
Despite the rapid expansion, wheat production in the 1980s was 
hurt by floods, droughts, and cheap contraband, all of which caused 
flour mills to operate at about half of capacity. Smuggled Brazilian 
flour sometimes was half the price of Paraguayan flour. Future 
growth in the wheat industry was constrained by a lack of adequate 
grain-cleaning and storage facilities. 

Paraguayans cultivated numerous other fruits, vegetables, and 
spices for both domestic consumption and export. Most common 
were citrus fruits, which were ideal for Paraguay's subtropical and 
tropical climate. Paraguay also produced pineapples, which accord- 
ing to some sources originated in Paraguay, and peaches, which 
were farmed commercially by fruit companies from the United 
States. Bananas, plums, strawberries, pears, avocados, guavas, 
papayas, mangoes, grapes, apples, watermelon, and other melons 
were cultivated to varying degrees as well. Vegetable production 
included gourds, squash, tomatoes, and carrots. Onions and garlic 
were widely grown and commonly used in cooking. 

A uniquely Paraguayan crop was the yerba mate plant. Yerba 
mate was grown throughout the country — especially Eastern 
Paraguay — for both domestic and regional markets. Large-scale 
production was traditionally dominated by Argentine and British 
interests. Despite its popularity, yerba mate output fell significantiy 
in the 1970s and 1980s, as farmers switched to more lucrative crops. 

Paraguay was also believed to be an expanding producer of 
marijuana in the 1980s. One United States Congressional report 
in the 1980s estimated annual production at 3,000 tons. 

Farming Technology 

In the 1980s most farmers held small plots of land, used low levels 
of agricultural inputs, such as equipment, fertilizer, and irrigated 
water, and produced primarily food crops for domestic consump- 
tion and some cash crops for additional income. Large holdings, 
many foreign-owned, operated with much higher levels of farm- 
ing technology and produced almost exclusively cash crops for the 
export market. Although agricultural colonization and greater cul- 
tivation of cash crops by small farmers were modifying this pat- 
tern, the basic agricultural dichotomy generally continued in the 
late 1980s. Although farming techniques were steadily improving, 
Paraguay continued to display some of the lowest yield rates in 



122 



Harvesting bananas in Santa Catalina 
Courtesy Inter-American Development Bank 

all of Latin America, indicating that agricultural modernization 
was still far away. 

The Mennonite colonies in the central Chaco offered a notable 
exception to the country's low yields. When Mennonites first arrived 
in 1926, the central Chaco was a virtual desert. Mennonite pioneers 
suffered great hardship for at least a generation to make the region's 
semiarid soils fertile. With time, the Mennonites converted the cen- 
tral Chaco into the major supplier of food for the entire Chaco and 
made it self-sufficient in almost every crop. The success of the Men- 
nonites was generally attributed to their dedication, superior farm- 
ing techniques, and access to foreign capital. 

A "land without people and people without land," a phrase often 
used to describe Paraguay, helped explain the country's longstand- 
ing farming methods. As a traditionally underpopulated nation, 
Paraguay suffered from labor shortages and negligent soil prac- 
tices that favored clearing new land rather than preserving culti- 
vated land. Because of the poor distribution of land, many farmers 
could not obtain sufficient income from working their own land 
and often engaged in seasonal wage labor in Argentina. Cultiva- 
tion practices typically were slash and burn with little use of crop 
rotation. New forestlands were then cleared by axe, and the cut- 
tings were burned; little plowing was done before planting. These 
practices became increasingly impractical in the 1980s as the 



123 



Paraguay: A Country Study 

market for fertile land tightened, especially in the eastern border 
region. The need for maintaining and improving soil fertility was 
greater than ever by the late 1980s. 

The use of purchased inputs in agriculture, such as fertilizers, 
insecticides, farm equipment, and irrigated water, remained low 
in Paraguay in the 1980s and occurred mostly on large estates. The 
country's aggregate level of fertilizer use stood at five kilograms 
per hectare in the mid-1980s, one of the lowest in Latin America. 
Some fertilizers were produced locally; most were imported from 
Brazil. Most fertilizer use was targeted at a few specific crops such 
as wheat, cotton, and soybeans. Although Paraguay's lands were 
naturally fertile, most agronomists felt there was an increasing need 
for higher yields rather than more colonization. Insecticide and 
herbicide use was even less prevalent than fertilizer use. Weed and 
insect damage was considerable among some crops, another fac- 
tor contributing to low agricultural productivity. Because most 
farms were small, the use of mechanized equipment generally was 
not appropriate for most farmers, and small farmers tended to use 
simple hand tools, rudimentary vehicles, and animal-pulled plows. 
By contrast, tractor use was common among large landholders, 
accounting for nearly all of the 4.4 tractors per 1 ,000 hectares that 
were reported in the mid-1980s. Irrigated farmland represented 
only 3 percent of all land under cultivation; this figure also was 
low by Latin American standards. 

One of the principal reasons for the continued use of traditional 
farming practices was the limited scope of government extension 
services. Although the Ministry of Agriculture and Livestock was 
dedicated to improving extension services and increasing produc- 
tivity, its greatest obstacle remained a lack of financial commit- 
ment on the part of the central government, which allocated only 
2 to 4 percent of the national budget to agriculture in the 1980s, 
despite the sector's fundamental role in the economy. The Minis- 
try's Agriculture and Livestock Extension Service (Servicio de 
Extension Agricola y Ganadera — SEAG) operated only in the 
eastern border region through 13 extension offices with a staff of 
under 500. SEAG was able to reach only approximately 15 to 20 
percent of the subregion's farmers, offering mostly crop- specific 
advice rather than more general technical assistance. Livestock ex- 
tension was generally neglected, and few efforts were made to inte- 
grate crop and livestock activity. Only limited technical assistance 
was available from international development organizations. Other 
constraints to increased productivity were the lack of necessary sup- 
port services in rural areas, such as health clinics and schools. 



124 



The Economy 



Likewise, a lack of basic infrastructure, including feeder roads and 
rural markets, hindered output. 

The Ministry of Agriculture and Livestock also played the leading 
role in the country's agricultural research. Most research took place 
inside the Department of Agriculture and Forestry Research. 
Research was oriented toward specific crops, mainly cotton, soy- 
beans, wheat, rice, sugarcane, tobacco, and certain fruits and 
vegetables. The principal goals of agricultural research were greater 
soil conservation and the introduction of high-yielding seeds. As 
with government extension services, the prime obstacle to expanded 
research efforts was financial. 

Credit was another structural constraint limiting agricultural 
productivity. Aggregate levels of financing to agriculture were 
insufficient to provide the necessary capitalization of the sector. 
Furthermore, small farmers received a disproportionately small 
share of credit, thus exacerbating technological backwardness and 
skewed land and income distribution. The principal financial 
institutions providing credit were the National Development Bank 
(Banco Nacional de Fomento — BNF), the Central Bank, and the 
Livestock Fund (Fondo Ganadero — FG), as well as about twenty- 
two commercial banks. The BNF was by far the largest lender to 
farmers, accounting for 45 percent of the sector's financing. Much 
of BNF lending did trickle down to short-term financing for small 
and medium farmers, but litde BNF lending went to capital 
investment. The Central Bank offered approximately 25 percent 
of the sector's credit, followed by the commercial banks at 23 per- 
cent and the FG at 7 percent. Commercial bank lending went to 
large exporting farms to cover processing and marketing costs. Some 
smaller cotton and soybean farmers also received commercial bank 
credit to purchase necessary inputs. The majority of all lending 
to the livestock sector originated from the FG — the only agricul- 
tural government credit-lending institution that was expanding sig- 
nificantly in the 1980s. 

Livestock 

Raising and marketing livestock, a traditional source of liveli- 
hood in Paraguay, remained a major segment of agriculture and 
the economy at large during the 1980s. Livestock output accounted 
for roughly 30 percent of agricultural production and about 20 per- 
cent of the sector's exports. The raising of livestock represented 
more than a quarter of total land use and 80 percent of all capital 
investment in agriculture. Paraguay's vigorous livestock sector also 
was responsible for the country's high per capita production and 
consumption of meat and dairy goods. It was estimated that 40 



125 



Paraguay: A Country Study 

percent of the country's land was especially suited for livestock and 
some 20 percent generally suitable. Endowed with plentiful graz- 
ing lands, Paraguay had vast potential for livestock development. 

After the importation of 7 cows and a bull by the Spanish in 
the mid- 1550s, the country's cattle herd swelled to some 3 million 
head by the time of the War of the Triple Alliance, the largest herd 
in the Southern Cone. As with every other sector of the Paraguayan 
economy, the war devastated the country's livestock sector, leav- 
ing only 15,000 head. It was not until World War I that domestic 
demand was met locally and significant exports left the country. 
By the end of World War II, beef exports had become a major 
foreign-exchange earner. Beef production and exports fluctuated 
considerably in the postwar period because of international price 
movements, weather conditions, government pricing policies, and 
other factors. In 1987 the country's cattle herd stood at about 8 
million head with an annual slaughter rate of 1 million head. In 
that same year, 75 percent of the slaughter went to the domestic 
market and the remaining 25 percent to the export market. 

Cattle, mostly beef cattle, were found throughout the country- 
side. The Chaco region was best known for its contribution to cat- 
tle raising because of its lack of crops and its sprawling ranches. 
Nevertheless, the cattle population density of Eastern Paraguay, 
0.6 head per hectare, was actually higher than that of the Chaco 
region, 0.3 head per hectare. 

The country's breeding stock was primarily Spanish criollo, 
although over the years considerable crossbreeding with English 
breeds and zebu cattle from Brazil had taken place. Although cat- 
tle were numerous in Paraguay, the country lacked a sufficient num- 
ber of pure-bred breeding cattle. The livestock sector also suffered 
from a low calving percentage, a high mortality rate, and a long 
fattening period for steers. Artificial insemination was increasingly 
common. To a certain extent, cattle raising reflected the dispari- 
ties in agriculture in general. There were numerous farmers who 
owned only a few head of relatively unproductive cattle that were 
slaughtered for the local market under relatively poor sanitary con- 
ditions. By contrast, extremely large cattle ranches typically were 
owned by expatriates and butchered more productive animals for 
both national and international markets. 

Seventy slaughterhouses for the domestic market and eight for 
the export market operated in the 1980s. Local slaughterhouses 
often could not pass sanitary inspections, but government inspec- 
tion efforts were focused on improving quality control of exports 
to meet the stringent regulations of foreign beef markets. The coun- 
try's beef exports expanded until 1974, when Paraguay lost access 



126 



Driving cattle along the Trans-Chaco Highway 
Courtesy Inter-American Development Bank 

to European Economic Community (EEC) markets and lower world 
prices further stagnated output. Beef exports responded strongly 
but erratically in the 1980s as the government's minimum export 
price system and contraband activity undercut greater export efforts 
(see Monetary Policy, this ch.). For example, beef exports were 
a mere 3,100 tons in 1985, 48,000 tons in 1986, and 18,000 tons 
in 1987, the last being the more typical figure. The 1986 boom 
in beef exports was the direct result of beef shortages in Brazil caused 
by price controls under its "Cruzado Plan." Paraguay's principal 
export markets were Brazil, Peru, Chile, the EEC (specialty items 
only), Colombia, Uruguay, and Saudi Arabia. Missing from offi- 
cial 1987 data, however, was the unregistered sale of an estimated 
300,000 head of cattle along the Brazilian border. 

Official government policy favored strong catde development and 
exports, a view articulated in national livestock programs since the 
early 1960s. A major policy tool to promote livestock growth was 
the FG. The FG was not only the major lender to the industry, 
but it also provided certain veterinary equipment and medicine, 
encouraged quality control in meat and dairy products, and oper- 
ated a model farm in the Chaco. 

Dairy cattle represented only a small fraction of the total herd. 
Most milk production occurred at an estimated 400 dairy farms 
in Asuncion, Puerto Presidente Stroessner, Encarnacion, and 



127 



Paraguay: A Country Study 



Filadelfia. The best yields came from holstein-friesian dairy cattle 
followed by crossbreeds and criollo. High feed costs and the general 
inefficiency of small dairy farmers slowed the growth of the indus- 
try. The country produced approximately 180 million liters of milk 
a year in the late 1980s. 

Other livestock activity including poultry farming and the swine 
industry. Some of the most productive poultry farming took place 
in the Mennonite colonies, in Japanese colonies in the eastern 
border region, and in the greater Asuncion area. Observers esti- 
mated that there were over 14 million chickens, 400,000 ducks, 
55,000 turkeys, and several other types of fowl. Egg production 
stood at 600 million per year in the late 1980s and was growing 
at about 4 percent a year. Pig farming was a relatively minor 
activity, engaged in mostly by small farmers. The pork industry's 
greatest structural problems were the high cost of feed and con- 
sumer preferences for beef. Government policy emphasized self- 
sufficiency in feed grown on small pig farms. Paraguay's swine 
population amounted to roughly 1.3 million in the late 1980s and 
had grown at a rate of 6 percent a year in the first half of the decade. 

Forestry and Fishing 

Forestlands constituted approximately one-third of Paraguay's 
total area. Utilized for fuelwoods, timber exports, and extracts, 
the country's wooded areas constituted a key economic resource. 
Approximately half of all woodlands contained commercially valu- 
able timber. In the 1980s about 4 million hectares were being lum- 
bered commercially. Forestry data were only broad estimates, 
however, as a full third of timber production was believed to be 
exported illegally to Brazil. Registered forestry exports accounted 
for about 8 percent of total exports during most of the 1980s. Forests 
have played an important role in the economy since the 1800s with 
the processing of yerba mate and the resilient quebracho. Because 
of a general decline in tannin exports, however, the quebracho 
played a correspondingly less important role in forestry. 

Officially, Paraguay produced over 1 million cubic meters of lum- 
ber a year in the 1980s. Trees were processed at over 150 small, 
mostly outdated sawmills that produced wood products for the 
paper, cardboard, construction, and furniture industries and for 
export. Trees also fueled the country's railroad and largest steel 
mill. The country's woodlands contained over forty-five species of 
wood suitable for export, but fewer than ten species were exported 
in quantity. Paraguay was recognized as an exporter of fine tim- 
ber, and its wood exports were internationally competitive. In 1987 



128 



The Economy 



lumber exports to Argentina, Brazil, and Mexico earned US$50 
million in foreign exchange. 

Despite the abundance of premium forests, deforestation was 
progressing at an alarming rate, about 150,000 to 200,000 hect- 
ares per year. The rapid depletion of Paraguay's woods was caused 
by the clearing of virgin forests associated with agricultural coloni- 
zation, the farming practice of land-clearing and tree-burning, and 
the felling of trees for charcoal and the other fuelwoods that 
accounted for 80 percent of household energy consumption. 

Although the country contained enormous installed energy 
capacity, fuelwood remained the most important domestic source 
of energy in the 1980s. In fact, Paraguay's per capita consump- 
tion of fuelwood was the highest in all of Latin America and the 
Caribbean and nearly three times the level of other South Ameri- 
can countries. The deforestation question was complicated by the 
distribution of forestlands and population. Southeast Paraguay was 
being deforested the most rapidly. From the mid-1970s to the 
mid-1980s, that region's forestland decreased from just under 45 
percent of all land to 30 percent. The Chaco maintained a large 
number of forestlands and shrubs, but they could not be economi- 
cally exploited. 

Government policy was slow to respond to deforestation because 
of the traditional abundance of forests as well as the generally laissez- 
faire dynamics of the land colonization process. In 1973 the govern- 
ment established a National Forestry Service under the Ministry 
of Agriculture and Livestock to protect, conserve, and expand the 
country's forests. The service, however, was hindered by a lack 
of resources, staff, serious government initiatives, and public edu- 
cation on the problem of deforestation. The planting of fast-growing 
trees and modernization of the lumber industry were recommended 
by the government, but only about 7,000 hectares of new forests 
were seeded annually in the mid-1980s. Given these levels of 
deforestation and reforestation, analysts estimated that few com- 
mercial lumbering lands would be available by the year 2020. 

For landlocked Paraguay, fishing was only a minor industry. 
It focused on more than 230 freshwater fish species in the coun- 
try's rivers and streams. Only fifty or so species of fish were eaten, 
dorado and pacu being the most popular. Some fishing compa- 
nies, mostly family operations, maintained boats, refrigeration 
facilities, and marketing outlets. 

Energy 

Massive capital investments in hydroelectric projects along 
Paraguay's river borders with Brazil and Argentina in the 1970s 



129 



Paraguay: A Country Study 

and 1980s were the most salient characteristic of the country's 
energy sector and the economy at large. Although not a tradition- 
ally significant part of the national economy, the energy sector 
became an important contributor to the country's balance of pay- 
ments as Paraguay prepared to become the world's largest exporter 
of electricity in the 1990s. The rapid growth in energy investment 
in the 1970s rippled throughout the nation's economy, stimulat- 
ing the explosive growth of the eastern border region. The con- 
struction industry derived the greatest benefits from the hydropower 
projects, but the manufacturing, agricultural, and transportation 
sectors also gained from the sudden growth in the east. Paraguay 
was expected to surpass the United States in the mid-1990s as the 
world's leader in per capita installed electricity. 

Commercial energy represented only one- third of total energy 
consumption, mostly imported petroleum for the transportation 
sector. Paraguay was 100 percent dependent on foreign oil. Oil 
exploration had taken place sporadically since the 1940s, but no 
significant petroleum deposits had been found by 1988. Paraguay, 
however, was the most unexplored country in South America in 
terms of petroleum. Paraguay was increasingly experimenting with 
renewable alternatives to fossil fuels, such as sugar-based ethanol, 
an octane enhancer (see Renewable Energy Resources, this ch.). 
Mining accounted for only 0.4 percent of GDP in 1986. 

Electricity 

The electricity subsector underwent fabulous growth in the 1980s, 
making it the most important segment of the energy sector. Once 
almost entirely dependent on thermal and diesel generation of elec- 
tricity, the country by the late 1980s had shifted almost entirely 
to hydroelectricity. Electricity, gas, and water together accounted 
for 2.8 percent of GDP in 1986. The shift to hydropower started 
in 1968 upon the completion of the nation's first major hydroelec- 
tric plant, the Acaray plant, which supplied almost all of the coun- 
try's electricity in the 1970s and most of the 1980s. Although the 
Acaray plant was expanded in the mid- to late 1970s, its role in 
the economy was overshadowed by the construction of two of Latin 
America's largest public-sector projects, the Itaipu and Yacyreta 
hydroelectric plants. In addition to these plants, the government 
had finalized plans with Argentina for another plant — Corpus — 
to be located between Itaipu and Yacyreta (see fig. 7). Other plants 
also were planned downstream of Yacyreta. 

Despite the country's tremendous installed capacity and poten- 
tial capacity for electricity, domestic demand and access to elec- 
tricity lagged well behind supply and remained quite limited in the 



130 



The Economy 



late 1980s. Not until the early 1960s did the government introduce 
the first serious energy policies to improve rural electrification. Elec- 
tricity consumption increased 10 percent annually in the 1960s and 
upwards of 16 percent per year in the 1970s. General access to elec- 
tricity improved from a low 1 1 percent in the 1970s to over 40 per- 
cent by the mid-1980s, but with considerable regional disparities. 
Approximately 62 percent of people living in the Central Depart- 
ment had electricity compared with only 37 percent of the eastern 
border region residents and fewer than 1 percent in the Chaco. 
Asuncion accounted for nearly two-thirds of the nation's electricity 
consumption. 

The electricity system was controlled by the National Power 
Company (Administracion Nacional de Electricidad — ANDE), an 
autonomous, decentralized, public utility. Created in 1949, ANDE 
was reorganized in 1964 and made a financially independent entity 
attached to the Ministry of Public Works and Communications. 
Electricity was expensive for most Paraguayans, and power out- 
ages were common. Rapid growth in electrification added approx- 
imately 500 kilometers of electric lines per year to the grid in the 
1980s, and reliability improved. 

Only superlatives adequately describe the grandeur of the Itaipu 
hydroelectric power plant. Itaipu was the world's largest hydro- 
electric power plant, located on one of the world's five largest river 
systems. Itaipu 's cost was estimated at US$19 billion, but no exact 
figure was calculated. The plant's dam, small compared to those 
at some hydroelectric plants, nonetheless required the diversion 
of the entire Rio Parana, including the permanent flooding of the 
spectacular Guaira Falls and of some 235,000 hectares of land. Over 
a 5 -year period, the concrete poured each day would have been 
sufficient to construct a 350-story building. More importantly, the 
project created an "Itaipu euphoria" that brought jobs to 100,000 
Paraguayans, instilled a renewed pride in the country, and strength- 
ened the nation's image vis-a-vis its giant neighbor and largest eco- 
nomic partner, Brazil. 

The Itaipu project began with the signing of the Treaty of Itaipu 
between Paraguay and Brazil on April 26, 1973. The treaty created 
a binational authority — Itaipu Binacional — to see that the two coun- 
tries shared equally in the plant's operation. Itaipu provided 
Paraguay unprecedented employment opportunities and capital 
investment, but inadequate planning on the part of the govern- 
ment and the private sector hindered the country's ability to reap 
the project's full potential. Approximately 80 percent of the plant's 
construction was performed by local Paraguayan-Brazilian industry. 



131 



Paraguay: A Country Study 





BOLIVIA 



/General Eugenio A. Garay 

I \ 
1 \ 



Mariscal 
^Estigarribia 



Filadelfia 




7 



A 



ARGENTINA 



International boundary 
National capital 
Populated place 
Trans-Chaco Highway 



— — — Under construction 

Road 

1 1— Railroad 



Main airport 

J, Main port 

a Hydroelectric project 
25 50 100 Kilom eters 
25 50 100 Miles 




Corpus .."*" 



Figure 7. Transportation and Hydroelectric Facilities, 1988 



Because the Paraguayan parliament demanded early on that Para- 
guay receive a fair share of the project's work, Paraguay was offi- 
cially earmarked for 50 percent of all major contracts. In reality, 
Paraguay's small industrial sector was no match for Brazil's more 
technologically advanced industries. Observers believed that 
Brazilian companies actually rendered 75 percent of the total work- 
load and provided almost all the key inputs such as steel, cement, 
machinery, and special technical expertise. Even housing materi- 
als for Paraguayan construction workers were smuggled in from 
Brazil. 

After five years of labor, the Rio Parana was diverted, and from 
1978 to 1982 key construction was completed on the plant, dam, 



132 



The Economy 



and spillways. Brazil's serious economic problems in 1983 and 1984 
slowed the completion of the dam, but overall delays were reason- 
able by regional standards. Electricity was first generated on 
October 25, 1984, more than a decade after the signing of the treaty. 

Electrical operations were slowly developing at Itaipu in the late 
1980s, and full capacity was not expected to be reached until 1992. 
Because of delays in Brazil's sixty-cycles-per- second system, the 
plant's fifty-cycle units were the first to produce commercially, and 
this electricity went to Paraguay. Itaipu was so colossal, how- 
ever, that ANDE could process only about 30 percent of the out- 
put of one of Itaipu 's eighteen generators at peak output. As stipu- 
lated in the treaty, Brazil and Paraguay bought their electricity 
from the binational power facility at predetermined rates. Because 
Paraguay was expected to use only a tiny fraction of its power 
for the foreseeable future, it sold most of its share back to Brazil, 
also at a predetermined rate, including normal compensation 
and royalties. 

The major debate over Itaipu in the late 1980s revolved around 
the low prices that Paraguay had negotiated in the original treaty. 
What Brazil paid Paraguay for electricity was one-ninth what 
Paraguay was scheduled to receive from Argentina under the Treaty 
of Yacyreta, signed just seven months after Itaipu. After twelve 
years of indecision about how to adjust the Treaty of Itaipu, on 
January 25, 1985, Paraguay and Brazil signed five revisions to cover 
matters of financial compensation. Paraguay gained significantly 
from the 1985 revisions, but most analysts believed Paraguay 
deserved still greater compensation for its electricity. Further 
revisions were likely before the end of the century. 

The Yacyreta project, although generally overshadowed by the 
colossal Itaipu project, was one of Latin America's major public- 
sector projects in the 1980s. Established hastily by Argentina's 
Peronist government on December 13, 1973, the Yacyreta project 
was stalled for years as a consequence of regional maneuvering, 
lobbying by the Argentine nuclear and oil industries, and political 
instability in Argentina. After ten years of delays, the first major 
engineering contract finally was awarded in June 1983. As with 
Itaipu, Yacyreta was hindered by the general lack of physical 
infrastructure at the dam site. Also as with Itaipu, Paraguayan firms 
did not receive equal work, despite stipulations in the initial agree- 
ment. Construction of the dam and the hydroelectric plant con- 
tinued throughout the 1980s, but the major construction phase did 
not begin until the late 1980s, and numerous delays — mostly 
political — persisted. Yacyreta was not expected to become fully 
operational until the mid-1990s, more than twenty years after the 



133 



Paraguay: A Country Study 

treaty's signing and at a cost of as much as US$10 billion, five 
times the original calculation. 

An early point of contention between Paraguay and Argentina 
was the percentage of each country's land that would be flooded 
for the project's dam; more than 1,690 square kilometers would 
be needed — a larger area than was flooded for Itaipu. It was agreed 
that flooding was to be just about equally divided. Another dis- 
agreement involved Paraguay's exchange-rate policies. Exchange 
rates determined the final price Argentina would pay for the plant's 
electricity. This issue continued to be negotiated in the late 1980s. 

When completed, Yacyreta would be roughly one-quarter of the 
size of Itaipu, with an initial installed capacity of 2,700 megawatts 
and an annual generation capacity in excess of 17,500 gigawatt 
hours. Yacyreta' s electricity per unit would be more expensive to 
generate than Itaipu 's, and the unit price Paraguay would even- 
tually receive was expected to be much greater. None of the elec- 
tricity produced by Yacyreta was intended for use by Paraguayans; 
it was to be sold back to a binational body that would manage the 
plant. But the gearing up of key construction activity at Yacyreta 
in the late 1980s was expected to give a boost to the Paraguayan 
economy, which was suffering from what one observer termed the 
"post-Itaipu blues." Observers believed that the Argentine- 
Paraguayan project would provide renewed construction jobs, large 
capital inflows, and eventually badly needed foreign-exchange 
revenues. The binational project also would provide seriously 
needed bridges, highways, improved river transport at the port of 
Encarnacion, and even increased irrigation potential for nearby 
rice fields. 

Located midway between Itaipu and Yacyreta on the Rio Parana 
was the proposed site of the Corpus hydroelectric power plant. After 
years of preparation, Corpus remained in the planning stage in 
the late 1980s because of the slow progress at Yacyreta. Hydro- 
logically linked with Itaipu and Yacyreta, the Corpus plant was 
designed to make optimal use of the falls at Itaipu and the cur- 
rents of tributary rivers. In order to integrate and maximize 
the various projects along the Rio Parana, in October 1979 
Paraguay, Argentina, and Brazil signed the Itaipu-Corpus Accord, 
which set specific regulations for the projects and improved 
communication among the countries. Although planning was still 
not final in 1988, Corpus was expected to be comparable in size 
to Yacyreta. When operable, Corpus would raise Paraguay's 
electricity output to an estimated 300 times its domestic demand. 
Beyond Corpus, Argentina and Paraguay also planned several 
smaller hydroelectric power plants downstream from Yacyreta, 



134 



The Economy 



including ItatiTta-Cora and others. Future hydroelectric develop- 
ment along the river would continue to be coordinated by the Com- 
bined Technical Commission for the Development of the Rio 
Parana. 

Petroleum 

Paraguay imported 100 percent of its petroleum in the late 1980s. 
Petroleum was imported primarily from Algeria because Paraguay's 
only petroleum refinery was designed for "Saharan blend" oil. The 
refinery, located at Villa Elisa, had a 7,500-barrels-per-day capacity, 
very small by Latin American standards. Paraguay's refinery capa- 
bility was limited in terms of products, causing the country to import 
high-priced derivatives such as aviation fuel, premium gasoline, 
and asphalt. The price of oil was high because of the complex trans- 
portation required through Argentina on the Rio Parana and 
Rio Paraguay. Paraguayan Petroleum (Petroleos Paraguayos — 
Petropar) — owned 60 percent by the government and 40 percent 
by the private firm Paraguayan Refinery (Refinena Paraguaya) — 
imported all of the country's petroleum. Petropar was generally 
viewed as a profitable and well-managed enterprise. Esso Standard 
(Exxon), Paraguay Shell, and the Paraguayan company Copetrol 
marketed all petroleum products to the public with the exception 
of diesel and fuel oil, which were sold by Petropar. 

Paraguay became increasingly concerned with its oil dependence 
following the quadrupling of world oil prices in the autumn of 1973. 
Although there was enough growth in other sectors of the economy 
to offset the negative consequences, the crisis nonetheless rekin- 
dled the interest of policy makers in oil exploration. As a result, 
the legislature passed sweeping new regulations to promote oil 
exploration by multinational companies. Despite having some of 
the most liberal petroleum legislation in the world, Paraguay's 
limited prospects and severe lack of infrastructure in the Chaco 
dissuaded most companies from drilling, however. Indeed, from 
1944 to 1986 only forty- three wells had been drilled in Paraguay. 

Foreign firms conducted petroleum exploration under the 
supervision of the Ministry of Public Works and Communications. 
Most oil exploration in the 1980s took place in Carandayty Basin 
on Paraguay's western border with Bolivia and in the Curupaity, 
Pirity, and Pilcomayo basins bordering Argentina. Active explo- 
ration in Bolivia near its border with Paraguay and oil discoveries 
in Argentina only fifteen kilometers from Paraguay's border height- 
ened expectations of oil discoveries in Paraguay. Because of 
Paraguay's complicated geology, however, oil exploration was more 
difficult than originally anticipated and required sophisticated 



135 



Paraguay: A Country Study 



Brazilian technology. With or without oil discoveries, the govern- 
ment was contemplating the construction of an oil pipeline to 
Brazilian ports to import oil, or, in the case of a large oil discov- 
ery, to transport oil exports. 

Renewable Energy Resources 

To reduce the nation's costly foreign-exchange expenditures on 
imported oil, the Paraguayan government in the 1980s experiment- 
ed with a variety of nontraditional renewable energy resources. The 
most important of these experiments was a national plan for the 
use of ethanol, an octane enhancer and partial substitute for gaso- 
line. The National Ethanol Plan mirrored efforts in Brazil to use 
sugar-based ethanol in vehicles, where most of Paraguay's petro- 
leum was consumed. Ethanol policy was spearheaded by the 
National Commission on Fuel Alcohols and implemented by the 
government's Paraguay Ethanol Agency. In the 1980s, the policy 
was the subject of a national debate that examined the govern- 
ment's large role in the industry as a price fixer and promoter and 
weighed the industry's general inefficiency against its foreign- 
exchange savings. 

Paraguay began producing ethanol in 1980. In the late 1980s, 
there were at least six fuel alcohol plants, and roughly ten more 
were planned into the 1990s. Most plants were located in cane- 
growing areas and used sugar or molasses to produce anhydrous 
alcohol, generally utilizing Brazilian technology. Hydrated ethanol, 
a complete gasoline substitute, also was produced for more than 
7,000 specially made cars from Brazil. Ethanol production in the 
late 1980s exceeded 20 million liters. Analysts estimated that alco- 
hol production substituted for 130,000 barrels of imported oil a year. 

The government also experimented with other nontraditional 
energy resources. These included methanol, solar energy, wind 
energy, wood gasification, mini-hydroelectric plants, and gas gener- 
ated from organic material. 

Industry 

Industry, especially the manufacturing sector, historically was 
linked to agricultural processing until the 1970s, when the construc- 
tion of hydroelectric plants and new industrial incentives began 
to broaden the industrial base. Industry was composed principally 
of manufacturing and construction. Paraguay had no real mining 
sector, but the manufacture of construction materials included 
limited mining activity. Manufacturing and construction in the 
economy in the late 1980s remained dependent on developments 
in other sectors, such as agriculture and energy, for their growth. 



136 



Itaipu hydroelectric power plant 
Courtesy United States Department of State 

Although industry was becoming more visible in Paraguay in the 
1980s, industry's share of GDP actually declined in the 1970s and 
1980s because of more rapid growth in agriculture. 

Manufacturing 

Manufacturing accounted for 16.3 percent of GDP in 1986 and 
employed roughly 13 percent of the labor force, making Paraguay 
one of the least industrialized nations in Latin America. Manufac- 
tured exports, by most definitions, accounted for less than 5 per- 
cent of total exports; when semiprocessed agricultural products were 
included, however, that figure reached 77 percent. The growth of 
the country's manufacturing industries was hampered by numer- 
ous structural obstacles. These included a small internal market, 
limited physical infrastructure, costly access to seaports, a histori- 
cal lack of energy production, and the openness of Paraguay's econ- 
omy to the more industrialized economies of Brazil and Argentina. 
Another significant factor was the ubiquity and profitability of 
smuggling operations, which encouraged importing and reexporting 
rather than production. 

Paraguay's earliest manufacturing industries processed hides and 
leather from its abundant cattle and tannin from quebracho trees 
(see Agriculture, this ch.). Small-scale manufacturing, especially 
textiles, flourished under the Francia dictatorship, when the 



137 



Paraguay: A Country Study 

nation's borders were closed. The War of the Triple Alliance, 
however, devastated what little industry and infrastructure the coun- 
try had, causing Paraguay to enter the twentieth century as an 
almost completely agricultural society. Land sales to foreigners 
stimulated increased agricultural processing in the early twentieth 
century, including meat packing and the processing of flour, oil- 
seeds, sugar, beer, and pectin extract. After the early 1900s, small- 
scale manufacturing in all subsectors grew at a slow, but steady 
pace, with some of the fastest growth occurring because of the short- 
ages during World War II. 

The government's role in promoting industry increased in the 
postwar era, and in 1955 the Stroessner government undertook the 
country's first industrial census. Over the next twenty years, the 
government enacted a number of industrial incentive measures, 
the most important of which was Law 550. Law 550 promoted 
export-oriented industries or those that would save foreign 
exchange. It also provided liberal fiscal incentives for companies 
to develop specific areas of the country, especially the departments 
of Alto Paraguay, Nueva Asuncion, Chaco, and Boqueron. Incen- 
tives for business were related mostly to import-duty exemptions, 
but they included a variety of tax breaks and placed no restric- 
tions on foreign ownership. Approximately one-fourth of all new 
manufacturing investment from 1975 to 1985 was registered under 
Law 550. Most foreign investments originated from Brazil, West 
Germany, the United States, Portugal, and Argentina in that order 
of importance. The dynamic processes of agricultural colonization 
and hydroelectric development, combined with such attractive 
industrial incentives, caused manufacturing to grow at an unprece- 
dented rate in the late 1970s and early 1980s. 

Unlike many other Latin American governments, which followed 
an import-substitution industrial policy, the Paraguayan govern- 
ment had played a minimalist role in the economy through most 
of the postwar era, curtailing import tariffs and maintaining a realis- 
tic exchange rate. In the 1980s, however, Paraguay's exchange rate 
became overvalued and several state-owned heavy industry plants 
became operational. 

In the late 1980s, the major subsectors of manufacturing were 
food, beverages, and tobacco; textiles, clothing, leather, and shoes; 
wood and related products; and chemicals, petroleum, and plas- 
tics. Despite some increases in heavy industry in the economy dur- 
ing the 1970s and 1980s, Paraguayan industry was generally 
small-scale. Manufacturing production remained focused on con- 
sumer goods, and capital goods comprised under 5 percent of 
industrial output. In fact, in the 1980s Paraguay did not contain 



138 



The Economy 



even one of Latin America's 1 ,000 largest companies, at least some 
of which were found in most other countries in the region. Virtu- 
ally every subsector of Paraguay's manufacturing was character- 
ized by numerous small- to medium-sized firms and a few large 
firms, which often were foreign owned. Most companies operated 
well below their capacity. 

The food, beverages, and tobacco subsector has been the core 
manufacturing activity throughout Paraguay's history. In the late 
1980s, this subsector continued to dominate, accounting for about 
45 percent of industrial activity, depending on agricultural output 
in a given year. Agro-processing involved a large number of small, 
inefficient, and often family-run firms as well as a small number 
of large, efficient, and usually foreign-owned firms. The larger firms 
produced only the most lucrative items, such as oilseeds, meats, 
and various beverages, often for export. Some of the most com- 
mon small-scale producers manufactured milled items, baked goods, 
sugar and molasses, dairy products, candy, manioc flour, vinegar, 
coffee, and tobacco. Along with raw agricultural produce, processed 
and semiprocessed food generated nearly all of the country's exports 
in the late 1980s. But, as with other manufacturing subsectors, the 
profitability of the food subsector often was impaired by contra- 
band items from Brazil and Argentina, such as flour, meat, or dairy 
products. Paraguayan goods crossed borders unofficially as well, 
thus lowering official exports. 

The second most important manufacturing activity also relied 
on agricultural inputs for its base. Utilizing Paraguay's rich 
endowment of hardwood trees, the wood subsector represented 
about 15 percent of all industrial activity and contributed over 8 
percent of exports in the 1980s. The most voluminous wood export 
was lumber, which was produced by hundreds of small sawmills 
throughout the central and eastern border regions. In addition to 
saw wood, mills also produced a variety of milled wood, plywood, 
chipboard, and parquet flooring. Although the country cut and 
processed only a fraction of its hundreds of species, Paraguayan 
wood was known for its quality. The country also contained several 
small paper companies and one large paper and cardboard factory 
located at Villeta. 

Textiles, clothing, leather, and shoes comprised the third larg- 
est manufacturing subsector. These industries were traditional, 
grounded in the nation's abundance of inputs like cotton fibers, 
cattie hides, and tannin extract. The subsector accounted for about 
10 percent of all manufacturing. The textile industry performed 
spinning, weaving, and dyeing operations and produced finished 
fabrics that amounted to over 100 million tons in 1986. Most fabrics 



139 



Paraguay: A Country Study 

were derived from cotton fibers, but a growing number of synthetic 
and wool fibers also were produced. Textile production provided 
inputs to approximately sixty clothing firms that operated under 
capacity and were generally inefficient. As with so many other 
manufacturers, clothing companies met stiff competition from 
widespread unregistered imports, which often originated in Asia 
and typically entered across the Brazilian border. The leather 
industry was characterized by 200 or so small tanneries dotting the 
Paraguayan countryside. In addition, many medium and two large 
tanneries fashioned leather goods. The leather industry operated 
at only about 40 percent of capacity, however. The shoe industry 
comprised a few hundred small workshops and a dozen or so 
medium-sized firms, which produced some 5 million pairs of leather 
and synthetic shoes a year. 

The processing of petroleum, chemicals, and plastics repre- 
sented an increasing activity. In the late 1980s, this subsector 
represented less than 5 percent of industrial activity, but its 
share of manufacturing output was expanding because of the growth 
of heavy industry in Paraguay, especially industry related to the 
energy sector. The country also produced fertilizers, industrial 
gases, tanning chemicals, varnishes, and detergents. In 1987 a 
group of Japanese investors was considering the construction of 
a new fertilizer plant with a 70,000-ton capacity per year. Since 
the early 1980s, ethanol was being produced in large quantities, 
and the government was considering producing methanol. Also 
processed were paints, soaps, candles, perfumes, and pharmaceu- 
ticals. One of Paraguay's fastest growing industries was the new, 
relatively modern plastics subsector, which supplied a wide variety 
of goods to the local market. 

Construction 

Construction was one of the fastest growing areas in the economy 
in the late 1970s and early 1980s because of hydroelectric dams, 
other infrastructure projects, and brisk growth in residential housing 
in Asuncion. Many of the raw materials used in the construction 
industry, such as lime, sand, kaolin, gypsum, wood, and stones, 
were found and mined locally. Construction grew at a pace of over 
30 percent per year from 1977 to 1980, but in the 1980s it fluctu- 
ated dramatically with changes in hydroelectric activity and general 
economic growth. Construction amounted to 5.9 percent of GDP 
in 1986. 

One of the country's largest investments in construction and in 
industry in general involved the expansion and modernization of 
cement facilities. After years of undercapacity in cement production 



140 



The Economy 



and an outdated wet-cement process, the government spent nearly 
US$200 million to expand the country's largest cement plant at 
Vallemi. Financed through a consortium of French banks, the 
National Cement Industry (Industria Nacional de Cemento — INC) 
was completed in 1986. Because this completion date followed the 
pouring of cement at Itaipu, however, virtually all cement for that 
project came from Brazil. Moreover, located 546 kilometers west 
of Asuncion, INC was far removed from most industrial activity, 
particularly hydroelectric construction. As a result, in the late 1980s 
the plant operated at only 45 percent of capacity, and the plant's 
capital and operating costs formed a major part of the nation's debt 
burden in the 1980s. Increasing the plant's utilization by export- 
ing to regional markets frequently was discussed but in the late 
1980s remained an unlikely prospect. The financial burden of INC 
became a political issue as the country's debt burden mounted 
throughout the decade. 

The metal industry was the other major industry serving con- 
struction activity. Although Paraguay possessed no commer- 
cially exploitable metallic minerals, it had three steel plants. The 
largest plant, Paraguayan Steel (Aceros Paraguayos — Acepar), 
was completely government owned. Fueled by large charcoal 
furnaces and fed with Brazilian iron ore, Acepar was capable of 
producing 150,000 tons of steel annually, or about five times 
the country's average demand in the 1980s. Acepar began opera- 
tion in late 1986, having missed both the Itaipu construction 
boom and the opportunity to contract for Yacyreta. Acepar' s 1987 
output was under 50,000 tons and was not expected to increase 
substantially in the future. Acepar could not cover its own operat- 
ing costs, and even with government subsidies its steel was 
five times as costly as steel from other producers. In addition to 
Acepar, Paraguay had a plant with a capacity of 50,000 tons per 
year that produced competitively priced steel bars and other metal 
products; a marginal plant with only a 6,000-ton annual produc- 
tion capacity was also in operation. 

Beyond steel production, the metal subsector comprised more 
than 1,000 small smiths and metal workshops. Paraguayan com- 
panies produced a wide assortment of consumer goods such as 
simple agricultural tools, general hardware items, and metal furni- 
ture. The subsector also contained several large metallurgical 
companies. For the first time in the 1980s, local metallurgical com- 
panies produced water tanks, fuel tanks, and grain silos. Paraguay 
also maintained two respected shipyards. 



141 



Paraguay: A Country Study 

Services 
Financial System 

In 1986 the service sector contributed 51.3 percent of GDP. Of 
that total, commercial and financial services accounted for 30.3 
percent, transportation and communications for 4.6 percent, and 
other services for 16.4 percent. The latter category included govern- 
ment services, informal services, and tourism. 

The nation's financial system had a long history, but it did not 
undergo major changes until the rapid growth of the 1970s. Large 
increases in investment and accelerated growth brought on the swift 
monetization of the economy during the 1970s. National savings 
soared, as did the number of financial institutions, making Paraguay 
a budding financial center in the Southern Cone. Observers esti- 
mated that total financial activity increased more than sixty times 
from 1960 to the mid-1980s. But with the arrival of the 1982 regional 
recession, bank losses increased markedly, and by 1987 three major 
American banks had pulled out of the country. 

The commercial banks were the most important component of 
the financial system after the Central Bank and held a third of the 
assets of that system. The commercial banking system in 1988 com- 
prised twenty-two banks with forty-eight offices in Asuncion and 
forty-seven branches outside the capital. Although Paraguay's oldest 
commercial bank was established in 1920, the system's growth was 
most pronounced in the second half of the 1970s when seven new 
banks were registered. The newer banks that arrived were large, 
multinational banks that entered Paraguay to manage the massive 
capital investment associated with hydroelectric projects, to finance 
rapidly expanding agricultural exports, to participate in the intense 
economic activity along the Paraguayan-Brazilian border, and to 
take advantage of the liberal banking laws. Three banks — the 
Brazilian Banco de Asuncion, the Spanish Banco Exterior, and the 
American Citibank — held over half of all deposits. Despite the 
departure in 1987 of Bank of America, Chase Manhattan, and the 
Bank of Boston, Paraguay's commercial banking assets remained 
largely in foreign hands. 

The National Workers' Bank (Banco Nacional de Trabajadores — 
BNT) was the country's only mixed bank, owned 90 percent by 
contributory members and 10 percent by the government. Estab- 
lished in 1973, the BNT was created to serve as a savings and loan, 
a development bank, and a provider of a variety of financial ser- 
vices. BNT's clients were individual workers, unions, federations, 
artisans, and cooperatives. 



142 



Asuncion during the mid-day siesta 
Courtesy Tim Merrill 



Nonbanking institutions also were part of the burgeoning finan- 
cial system. These included finance companies, insurance compa- 
nies, and social security institutions. Most of these financial 
intermediaries were opened in the 1970s as consumer savings 
accumulated. The rapid growth of financial institutions was 
epitomized by finance companies, at least twenty-six of which were 
opened from 1975 to 1985. Unlike banks, most finance houses were 
locally owned. The majority were located in Asuncion, but at least 
five operated in Eastern Paraguay. Representing approximately 
6 percent of the financial system's assets, finance companies func- 
tioned mostly as short- to medium-term lenders for commercial 
activity and consumer durables. Some finance companies operated 
in conjunction with commercial banks, contrary to banking law. 

By the late 1980s, Paraguay had forty insurance companies, the 
overwhelming majority of which had been established since 1960 
and were locally owned. Services varied considerably, but the com- 
panies tended to have a marginal role in the financial system. There 
were also social security institutions, which offered health and retire- 
ment plans, but only one was in the private sector — a bank 
employees' pension program that was an important lender for mort- 
gages and consumer durables. 

The financial system also encompassed an array of development 
finance institutions, generally run by the government. Most notable 



143 



Paraguay: A Country Study 

among these institutions was the BNF, the major lender to agricul- 
ture and a significant provider of credit to industry, commerce, 
and livestock activity (see Farming Technology, this ch.). The BNF 
contained 14 percent of national assets. 

The major lender to livestock farmers was the government- 
operated Fondo Ganadero (FG), which also provided technical 
assistance to cattle raisers. The FG — established in 1969 with 
resources from the United States Agency for International Develop- 
ment (AID) and the World Bank — provided nearly 70 percent of 
the credit issued to livestock activity, usually in the form of medium- 
to long-term loans for fixed and working capital. The FG repre- 
sented approximately 7 percent of the country's financial assets. 

The Central Bank played an unusually active role in direct lend- 
ing through a variety of mechanisms, most notably the Special 
Development Fund (Fondo Especial de Desarrollo — FED), which 
also was created with AID and World Bank capital. The FED oper- 
ated two direct lending programs for rural enterprises and small 
farmers and a program for guaranteeing loans to rural enterprises. 
The FED accounted for roughly 2 percent of national finan- 
cial assets. 

A more minor government agency was the Agricultural Credit 
Agency (Credito Agricola de Habilitacion — CAH), which had oper- 
ated since 1943 providing credit and inputs to small farmers. CAH 
comprised only 1 percent of the country's assets. 

The government also managed or participated in several other 
financial institutions. The most important were those that financed 
and mobilized savings for mortgages. Of these, the two major 
groups were the National System of Savings and Loans for Hous- 
ing (Sistema Nacional de Ahorro y Prestamo para la Vivienda — 
SNAPV) and the Paraguayan Institute for Housing and Urban 
Development (Instituto Paraguayo de Urbanizacion y Vivienda — 
IPVU). The SNAPV was affiliated with private savings and loans, 
which together formed the National Bank of Savings and Loans 
for Housing (Banco Nacional de Ahorro y Prestamo para la 
Vivienda). With 4 percent of the country's assets, SNAPV served 
as a major issuer of mortgages. The IPVU, which contained only 
1 percent of assets, fell under the umbrella of SNAPV activities 
and specialized in credit for low-income housing and urban de- 
velopment. The government also oversaw five public- sector enti- 
ties that functioned as contributory social security agencies. These 
entities generally operated under the Social Insurance Institute (In- 
stituto de Prevision Social — IPS), which provided health plans, 
workers' compensation, and unemployment insurance through a 
worker and employer contributory system. 



144 



The Economy 



Tourism 

Tourism played a minor but expanding role in the economy in 
the 1980s. In 1986 the industry generated foreign-exchange earn- 
ings in excess of US$100 million. Most tourists came from neigh- 
boring Brazil and Argentina and stayed an average of three days. 
Tourist arrivals tripled from 1970 to 1986, although the number 
of tourists tended to reflect fluctuations of the value of the guarani 
vis-a-vis other currencies in the region. Many tourists did not visit 
Paraguay for traditional sightseeing but rather to purchase the cheap 
consumer goods that constantly flooded Paraguay's contraband 
markets, especially along the Brazilian border. 

Transportation 

Inadequate physical infrastructure, which had been responsible 
for the economy's slow development, persisted in the late 1980s. 
Landlocked and underpopulated, Paraguay was often dependent 
on river systems as the principal means of transportation. In the 
1980s, the country also enjoyed a rapidly growing road system and 
trucking industry. In the 1970s, Paraguay broke its long-time 
dependence on Argentina for access to the Atlantic Ocean when 
a major road system was completed, connecting the eastern border 
region with the Brazilian ports of Santos and Paranagua. Along 
with new roads, the number of traffic lights in the capital increased, 
going from one in the early 1980s to over a dozen late in the decade. 

Ports and Rivers 

To reach Paraguay's major cities from the Atlantic Ocean, ves- 
sels must pass through nearly 1,500 kilometers of Argentine terri- 
tory. Paraguay's river systems also connect the country with Bolivia 
and the Pacific Ocean as well as with Brazil, its largest trading part- 
ner. From the late 1880s, river transportation in Paraguay was 
dominated by Argentine and Brazilian shipping companies. 

The Rio Parana and Rio Paraguay are the country's two main 
waterways (see fig. 3). The Rio Paraguay, with headwaters at Mato 
Grosso, Brazil, flows southward, converging with the Parana in 
southwestern Paraguay, and then flowing to the Rio de la Plata 
Estuary, the entrance for the great majority of ships servicing 
Paraguay's ports. Vessels over 5,000 tons can travel upriver only 
as far as Asuncion during the high-water period (March to Oc- 
tober). The Rio Parana, 4,500 kilometers in length, is one of the 
world's major rivers and the primary mode of transportation along 
Paraguay's eastern and southern borders. Also flowing southward, 
the Parana throughout the 1980s was only navigable for most ships 



145 



Paraguay: A Country Study 



up to the port of Encarnacion. The construction of the Yacyreta 
hydroelectric plant, however, was expected to raise the water lev- 
els at Encarnacion, allowing ocean-going vessels to venture as far 
north as Puerto Presidente Stroessner. 

As a result of the rapid growth in road construction since the 
1970s, the transportation role of smaller rivers was declining, 
especially in terms of international trade. Still, these river systems 
comprised over 3,000 kilometers of inland waterways. 

The port of Asuncion was the nation's only truly modern port 
and handled most of the country's imports and exports (see fig. 
7). Asuncion sported modern berthing facilities and advanced cargo- 
handling equipment. Originally privately owned, the port was pur- 
chased by the government in 1 940 and was managed by the Minis- 
try of Public Works and Communications through the National 
Port Authority. In the 1980s, the government was striving to expand 
and upgrade the port's highly congested facilities. Because of con- 
gestion at Asuncion, the government also was planning to build 
a new port thirty- seven kilometers south of the capital at Villeta. 
Asuncion's future role as a port would be primarily to receive 
imports. In the late 1980s, Villeta already was handling a greater 
share of the country's agricultural and industrial exports. The fastest 
growing hub of commercial activity, however, was located at the 
port city of Puerto Presidente Stroessner, where Paraguay was con- 
nected with Brazil by the spectacular single-span Friendship Bridge. 
This growing city was also the site of the country's new interna- 
tional airport and generally served as the major way station for 
contraband trade. The country's other ports were generally small 
and less modern than Asuncion; they included San Antonio, 
Encarnacion, Concepcion, Casado, Villa Elisa, Bahia Negra, Sajo- 
ma, Calera Cue, and Vallemi. 

The government's Merchant Marine (Flota Mercante del 
Estado — Flomeres) handled approximately 25 percent of the coun- 
try's annual cargo level. Although many of the country's ships were 
outdated, in the 1980s Flomeres purchased more modern ships from 
Japan through government financing from that nation. Paraguay 
also had a private- sector fleet of merchant ships and numerous small 
shipping enterprises. Argentine, Brazilian, Dutch, British, and 
American companies provided the balance of shipping services. 

Roads and Vehicles 

The lack of an adequate road system was one of the largest struc- 
tural obstacles to more rapid and more evenly distributed develop- 
ment in the 1980s. As in the economy at large, Paraguay had made 
great strides in highway construction, increasing the road network 



146 



The Economy 



from fewer than 1 ,000 kilometers after World War II to more than 
15,000 kilometers in the late 1980s. Road construction, primarily 
the task of the Ministry of Public Works and Communications, 
increased steadily in the 1970s, representing about 25 percent of 
public-sector investment in that decade. But Paraguay still lacked 
an adequate network of paved roads. In the late 1980s, only 20 
percent of the country's roads were paved, and the remaining 80 
percent were mostly dirt roads, easily flooded and often impas- 
sible during inclement weather. Only three paved highways 
extended well into the interior from the capital. 

In the 1980s, the completion of two major highway construc- 
tion projects facilitated travel from Asuncion to Argentina and 
Brazil. The other major thoroughfare in the country was the 
700-kilometer Trans-Chaco Highway, one of the government's 
principal attempts to develop the Chaco region. Construction 
progressed slowly, however, and in the late 1980s only about half 
of the road had been paved. Most vehicles could not complete the 
trek to the Upper Chaco. The government was also building 
feeder roads to allow the transport of agricultural goods. Feeder 
road construction was very slow in many areas, and private agribusi- 
nesses sometimes built their own roads. 

The number of registered vehicles quadrupled from 1975 to 1985 
as a result of the growing road network, the strong perfor- 
mance of agriculture, and general economic growth. There 
were roughly 40,000 automobiles registered in Paraguay in the late 
1980s, one-sixth of which ran on "alco-nafta," an ethanol-enhanced 
fuel. Other vehicles included 2,000 taxis, 3,000 buses, and more 
than 20,000 each of trucks, pickups, and motorcycles. Public 
transportation, including buses and streetcars, was widely used in 
Asuncion, but service was limited in rural areas, especially in the 
Chaco. New bus terminals were built in the 1980s and bus routes 
expanded, particularly to accommodate the increased demand 
by bus-driven tourists. The trucking industry played an expand- 
ing role in the country's transportation. According to Paraguay's 
Chamber of Exporters, by 1982 about 62 percent of registered 
exports left the country on the road system, mostly by truck. 

Rail System 

Since 1965 the Paraguayan railroad has played a declining role 
in domestic transportation. One of South America's oldest rail 
systems, the President Carlos Antonio Lopez Rail Line, was 
started in 1854. Swapped back and forth by the state and private 
companies several times, the railroad was nationalized in 1961. 
Offering twice- weekly service between Asuncion and Encarnacion, 



147 



Paraguay: A Country Study 

the 367-kilometer rail system was outdated, wood-powered, slow, 
and generally costly even with government subsidies. The amount 
of cargo carried on the railroad declined swiftly in the 1970s and 
1980s as alternative roads and waterways became more efficient, 
but some agricultural goods did move by train. In Encarnacion, 
the Paraguayan railroad system connected via ferry with the 
Argentine city of Posadas, which was connected by rail to Buenos 
Aires and the Uruguayan railroad. There also was a small "soy- 
bean railroad" near the Brazilian border. In the 1980s considera- 
ble debate revolved around the possibility of an electric urban 
transport system in Asuncion or the electrification of the national 
railroad, drawing on the country's large installed electrical capacity. 

Air Service 

Air transport, like the country's road system, was still inade- 
quate in the late 1980s but had grown considerably over the previ- 
ous two decades. Estimates of the country's total number of airports 
were as high as 700. There were, however, only 400 registered air- 
ports, virtually all of which used dirt or grass runways. Few air- 
ports were used commercially and on a regular basis. The airports 
of several medium-sized cities, such as Concepcion, Filadelfia, 
Encarnacion, and Pilar, needed improved paving and lighting for 
runways. 

In the late 1980s, Paraguay's only all-weather airports were at 
Asuncion — which handled all international flights — and Mariscal 
Estigarribia. In April 1987, construction began on a second all- 
weather, international airport at Puerto Presidente Stroessner. Con- 
struction of the airport was undertaken by a Spanish firm using 
Japanese equipment and financing. The high cost of the project — 
upwards of US$100 million — and the prominent role of Japanese 
consultants and equipment stirred controversy. 

Paraguay was one of the last countries in the Western 
Hemisphere to establish commercial air service. The first service 
was offered in 1929 by an Argentine firm, and not until 1938 was 
regular air service available. The country's international flag car- 
rier was Paraguayan Airlines (Lineas Aereas Paraguayas — LAP). 
Government owned and under the administrative control of the 
air force, LAP carried approximately 70 percent of the country's 
air passengers in the late 1980s. The air force's Military Air Trans- 
port (Transporte Aereo Militar) and the National Transport Airlines 
(Lineas Aereas de Transporte Nacional) offered domestic service. 
Numerous foreign carriers also serviced the country: Braniff, 
Eastern, Varig (Brazil), Iberia (Spain), Aerolineas Argentinas, 
LAN-Chile, and Bolivian Airlines being among them. 



148 



A trolley in Asuncion 
Courtesy Tim Merrill 

Communications 

Although Paraguay was the first nation on the South American 
continent to enjoy telegraph services, its communications system 
developed slowly. In the 1980s, only one in forty-nine Paraguayans 
owned a television, one in twenty a radio, and one in fifty- two a 
telephone. In each category, Paraguay ranked last in South America, 
well behind lesser developed countries such as Bolivia and Guyana. 

Telephone services were solely owned by the state's National 
Telecommunications Company (Administracion Nacional de 
Telecomunicaciones — Antelco). Domestic telephone service was 
outdated and sometimes unreliable. Consumers typically waited 
six months to have service installed and were charged a very high 
price. Long-distance service was available from most major cities 
and was generally more dependable than local service because it 
used a microwave and satellite transmission system. Telex ser- 
vices also were available through Antelco. Communication ser- 
vices in the Chaco remained very deficient in the 1980s. 

External Sector 
External Trade 

In the 1980s, Paraguay was a rather open economy, in which for- 
eign trade played a large role. Registered imports as a percentage 



149 



Paraguay: A Country Study 



of GDP in 1986 were approximately 28 percent; when unregistered 
imports were included, however, that figure exceeded 50 percent, 
showing the Paraguayan economy to be very open. With the 
exception of the Francia regime, international trade had been an 
important component of economic activity in Paraguay since 
independence. In the 1980s, the composition of trade was essen- 
tially the same as it had been for decades: raw and semiprocessed 
agricultural exports and imported fuels, capital goods, and manufac- 
tured items. Paraguay's dependence on just a few exports, mostly 
soybeans and cotton, made its export base sensitive to weather con- 
ditions and international commodity prices. As a result of low prices 
for agricultural exports, poor weather conditions, and an overvalued 
exchange rate, which reduced the international competitiveness of 
the nation's exports, Paraguay experienced unprecedented trade 
deficits in the 1980s. A sharp rise in imports — the legacy of the 
boom years of the 1970s — also exacerbated chronic trade deficits 
that persisted in the late 1980s. 

Import data varied widely, and economists viewed the statistics 
cautiously, more as a general barometer than a specific indicator. 
In 1986 official imports were estimated at US$518 million. 
Unregistered imports in the same year were believed to have reached 
US$380 million, or 42 percent of total imports. Unregistered trade 
figures were generally calculated by comparing Paraguay's offi- 
cial trade data with those of its major trading partners. Comput- 
ing the total trade deficit, including estimates for unregistered 
imports and exports, the country's trade deficit stood at an 
unprecedented US$527 million in 1986 (see table 7, Appendix). 
Some 62 percent of all imports were manufactured goods, and 38 
percent were primary commodities. Manufactured products, 
capital goods, and fuels accounted for 81 percent of all imports. 
Food, metals, minerals, and other raw materials made up the 
balance. 

Government import policies were liberal, characterized by low 
tariffs and by import taxes on luxury consumer goods, a signifi- 
cant source of government revenues. Special import exemptions 
were extended to certain industries, such as those established under 
Law 550 (see Manufacturing, this ch.). The government's import 
policies favored import-substitution strategies only where feasible 
and favored capital imports to accelerate the capitalization of the 
private sector. 

Despite the industrial nature of the country's import basket, most 
imports originated from developing countries. Developing coun- 
tries contributed approximately 48 percent of imports, followed by 
industrial countries, with 38 percent, and undisclosed countries, 



150 



The Economy 



with 14 percent. Registered Brazilian exports, 28 percent of the 
market, were more than double those of any other nation export- 
ing to Paraguay. Considering the brisk smuggling activity along 
the border, Brazil was clearly the main economic force influenc- 
ing Paraguay. Other major importers, in order of importance, were 
the United States, Argentina, Algeria, Japan, Britain, and West 
Germany. Algerian crude oil was sometimes bartered for the coun- 
try's agricultural exports. 

One of the greatest challenges that Paraguay faced in the late 
1980s was controlling its domestic consumption. Imports had 
swelled in the 1970s at a time when unprecedented exports and 
capital inflows offset the negative consequences of high import levels. 
These fortunate circumstances were not present in the subsequent 
decade. 

Export data also varied and were generally less credible than 
import data. Estimates of registered exports in 1986 stood at US$233 
million, but when adjusted for unregistered exports that figure 
reached US$371 million. The percentage of illicit exports fluctu- 
ated greatly in the 1980s. Analysts believed that illegal exports 
represented 37 percent of total exports in 1986, but that they had 
made up as much as 89 percent of total exports in 1981. 

The structure of Paraguay's export basket displayed one of the 
hemisphere's highest concentrations on a few cash crops. Although 
Paraguay's exports were historically all agricultural, they had 
included a variety of products, including beef, timber, cash crops, 
and processed agricultural goods. That pattern changed in the early 
1970s, however, as the price of soybeans and cotton soared (see 
Crops, this ch.). The percentage of total exports attributed to cot- 
ton and soybeans rose from 1 percent in 1960 to 6 percent in 1970, 
60 percent in 1981, and 63 percent in 1987. Beef, wood, quebracho, 
and oilseeds represented a decreasing percentage of exports. The 
fragility of the export structure was apparent in the 1980s, as poor 
weather conditions and prices greatly hindered the pace of export 
expansion and economic growth. 

In contrast to the concentration of products exported, Paraguay 
maintained well diversified export markets. Unlike most Latin 
American economies, Paraguay exported extensively to European 
markets and only marginally to the United States. Trade with Latin 
America was also vibrant. Some 55 percent of all the nation's 
exports went to industrial countries, particularly members of the 
EEC. In the late 1980s, the Netherlands, purchaser of 22 percent 
of Paraguay's exports, became its number-one recipient of 
registered exports, mostly processed oils. Following the Nether- 
lands among industrialized countries trading with Paraguay were 



151 



Paraguay: A Country Study 

Switzerland (10 percent), West Germany (5 percent), Belgium and 
Luxembourg (5 percent), Spain (4 percent), and Italy (4 percent). 
The United States purchased only 3 percent of Paraguay's goods 
in 1986. Developing countries, all in the Western Hemisphere, 
received 26 percent of Paraguay's registered exports. Brazil received 
15 percent, Argentina 9 percent, and Uruguay 2 percent. These 
figures, however, did not include contraband, which, if added, made 
Brazil the number-one market overall and Argentina probably the 
second. Other markets took 19 percent of exports. Although not 
recorded in government data, observers believed that in the 
mid-1980s Paraguay made limited sales of cotton and grain to the 
Soviet Union despite the fact that the countries did not maintain 
diplomatic relations. 

Since the first National Economic Plan of 1965, the government's 
trade policy had explicitly promoted exports. The extraordinary 
growth in exports in the 1970s, and to a limited degree in the 1980s, 
however, was more the direct response of Paraguay's free-market 
economy to international price movements than the result of govern- 
ment policy. One of the reasons for Paraguay's declining level of 
exports after 1982, besides lower prices, was the government's 
exchange-rate policies. A five-tiered exchange rate system and 
generally overvalued guarani generated less competitive exports 
and slowed their expansion. Export taxes and foreign-exchange 
taxes also discouraged exports, particularly registered exports. 
Another growing disincentive for certain exporters was the Cen- 
tral Bank's Aforo system (see Monetary Policy, this ch.). 

Balance of Payments and Debt 

In 1982 Paraguay experienced its first balance-of-payments deficit 
in twelve years, which was followed by at least five years of con- 
secutive deficits. Balance-of-payments deficits were the direct result 
of the mushrooming merchandise trade deficit and the decreased 
level of private capital investment, both the legacy of the 1970s, 
when large surpluses on the capital account more than made up 
for current-account deficits. The balance-of-payments situation 
became quite fragile in the late 1980s. Expectations of rectifying 
the country's international accounts centered around a reversal of 
the declining terms of trade, increased electricity exports, continued 
devaluations of the guarani, and renewed capital inflows associated 
with Yacyreta. 

Chronic deficits on the current account, primarily trade deficits, 
were the prime reason for the poor performance of the country's 
balance of payments. The nation's trade deficit grew from US$10 
million in 1970 to US$57 million in 1975 and US$527 million in 



152 



Construction work on the Trans-Chaco Highway 
Courtesy Inter-American Development Bank 

1986. Over the same period, debits on the services portion of the 
current account were negative but to a lesser extent. Growth in 
tourism in particular served to lower the services deficit after 1982. 
Net transfers played only a minimal role in the current account. 

Large surpluses on the country's capital account offset current 
account deficits until 1982, when exports and capital inflows began 
to slow. Most capital inflows in the 1970s and 1980s were related 
to Itaipu and later Yacyreta, and their special role earned them 
separate entries on the balance of payments. Capital account sur- 
pluses in the 1970s and early 1980s increased Paraguay's interna- 
tional reserves to a high of US$781 million in 1981, or roughly 
seven months of imports. The country's largest balance-of-payments 
deficit occurred in 1982. This was financed from accumulated 
reserves, as were the five years of deficits that followed. In 1986, 
during the post-Itaipu recession period, reserves declined to US$377 
million, the equivalent of less than four months of imports. Unlike 
many Latin American countries in the 1980s, however, Paraguay 
had amassed sufficient reserves in the 1970s to finance its balance- 
of-payments deficits. Paraguay did not have to draw on IMF or 
other external resources to weather its deficits. 

Foreign direct investment in Paraguay in the 1970s and 1980s, 
the source of capital account surpluses, was mostly in hydroelec- 
tric development, banking, and Law 550 companies. The most 



153 



Paraguay: A Country Study 

striking feature of foreign investment was the growing dominance 
of Brazil, which represented one-fifth of all foreign investment and 
72 percent of Latin American investment inParaguay. The Banco 
do Brasil became one of the country's leading creditors, financing 
80 percent of Itaipu, 100 percent of the steel company Acepar, and 
considerable agribusiness investment in the eastern border region. 
West Germany followed Brazil and was particularly involved in 
banking and Yacyreta. The United States was the third largest for- 
eign investor, with a portfolio of banking, petroleum exploration, 
and agribusiness. United States capital was dominant among Law 
550 firms. Other major foreign investors included Argentina, Japan, 
France, and Italy. 

Paraguay weathered the Latin American debt crisis of the 1970s 
rather well. As the fastest growing economy in Latin America for 
most of the 1970s, Paraguay prospered while many of its neigh- 
bors struggled. Paraguay's debt grew from under US$200 million 
in 1972 to US$842 million by 1980, but with rapid growth in GDP, 
debt as a percentage of GDP remained approximately 15 percent. 
Unlike many neighboring economies in the 1970s, which borrowed 
to compensate for balance-of-payments deficits or inefficient state- 
owned enterprises, Paraguay's minimal lending generally went 
toward productive investment in infrastructure, hydroelectricity, 
and agriculture. Because Brazil carried the overwhelming share 
of the debt burden of Itaipu, even that large investment did not 
greatly indebt the country. Furthermore, about 80 percent of 
Paraguay's debt was with official creditors, not commercial banks, 
allowing for greater flexibility and more favorable terms of loan 
repayment. Latin America as a region, by contrast, owed more 
than 70 percent of its debt to commercial banks in 1987. 

Paraguay's debt, however, grew rapidly in the 1980s, at the 
second fastest rate in Latin America. From 1980 to 1987, the coun- 
try's indebtedness more than doubled, to roughly US$2 billion. 
Because of Paraguay's slow economic growth during that period, 
debt as a percentage of GDP spiraled to above 50 percent. Over 
the same period, Paraguay's debt-service ratio — total debt-service 
payments as a percentage of exports of goods and services — swelled 
from 19 percent to 37 percent. Paraguay's rapidly growing debt 
in the 1980s mirrored that of its neighbors for the first time in 
the sense that loans were destined primarily to cover the capital 
and operating costs of state-owned enterprises. The central govern- 
ment and state-owned enterprises were responsible for almost equal 
shares of nearly 90 percent of the country's external debt in the 
1980s. In 1986 the government was unable to make its payments 
on a debt to Banco do Brasil; rescheduling this debt blemished 



154 



The Economy 



Paraguay's previously untarnished credit rating. In the late 1980s, 
analysts expected Paraguay's national indebtedness to grow. 

Foreign Assistance 

Most of Paraguay's foreign assistance came in the form of con- 
cessional loans from multilateral development banks, particularly 
the World Bank and the IDB. These sources of assistance accounted 
for the high percentage of the country's debt with official credi- 
tors. From 1946 to 1982, the World Bank provided Paraguay 
US$1.3 billion, the IDB, US$409 million, and United Nations 
agencies, US$30 million. Paraguay received no money from the 
IMF in the 1980s. Multilateral bank lending went toward energy, 
agriculture, transportation, communications, public health edu- 
cation, rural electrification, and support activities, such as statis- 
tics gathering. In addition, the IDB also made loans to smaller 
projects benefiting low-income farmers and small-scale enterprises 
in Asuncion's large informal sector. 

The United States was traditionally the largest bilateral donor 
in Paraguay, but in the 1980s Japan and West Germany surpassed 
the United States in bilateral economic assistance. From 1946 to 
1987, the United States provided US$212 million to Paraguay, 61 
percent in the form of project- specific funding, 18 percent through 
the "Food for Peace" program, and 20 percent for other programs, 
including narcotics interdiction. The last year of major United States 
funding was 1981. From 1982 to 1987, United States assistance 
was under US$12 million. During the 1980s, AID classified 
Paraguay as an "advanced developing country" and offered that 
as one reason for its declining economic assistance. Other reasons 
were political (see Relations With The United States, ch. 4). Despite 
the dwindling financial support of AID, the United States main- 
tained a large Peace Corps volunteer program. The Inter- American 
Foundation also remained active in Paraguay. 

* * * 

After decades of sparse research and publishing on the 
Paraguayan economy, in the 1980s there appeared unprecedented 
documentation of the rapidly changing economy. Most of the 
research and publication efforts inside Paraguay took place at the 
Paraguayan Center for Sociological Studies (Centro Paraguayo de 
Estudios Sociologicos). This institute published numerous valua- 
ble articles in its journal, Revista paraguaya de sociologia. Outside the 
Center, the Central Bank published the most comprehensive data 



155 



Paraguay: A Country Study 

through its Department of Economic Studies, including the Bole- 
tin estadistico (monthly) and Cuentas nacionales (annual). 

One of the most encyclopedic studies on the Paraguayan econo- 
my in the 1980s was Guillermo F. Peroni and Martin Burt's 
Paraguay: Laws and Economy. Two more critical essays were Ricardo 
Rodriguez Silvero's La deformation estructural: Reflexiones sobre el desar- 
rollo socio- economico en el Paraguay contempordneo and Anibal Miran- 
da's Desarrollo y pobreza en Paraguay. The most in-depth book 
concerning Itaipu was Itaipu: Dependencia o desarrollo by Ricardo 
Canese and Luis Alberto Mauro. As of 1988, there was no book 
published in the United States that examined in detail the 
Paraguayan economy of the 1970s and 1980s. Two of the best jour- 
nal articles published in the United States were written by Werner 
Baer and Melissa Birch: "Expansion of the Economic Frontier: 
Paraguayan Growth in the 1970s" and "The International Eco- 
nomic Relations of a Small Country: The Case of Paraguay." 

In general, data on the economy varied greatly, and no single 
source was definitive as of 1988. The most reliable data were 
produced by the IMF, the World Bank, the IDB, and the Economist 
Intelligence Unit. (For further information and complete citations, 
see Bibliography.) 



156 



Chapter 4. Government and Politics 




Presidential offices at the Government Palace, Asuncion 



ON FEBRUARY 14, 1988, General Alfredo Stroessner Mattiauda 
was elected for his eighth consecutive term as president of the 
Republic of Paraguay. Stroessner, the candidate of the National 
Republican Association-Colorado Party (Asociacion Nacional 
Republicana-Partido Colorado), officially won 88.7 percent of the 
vote. At the time of the election, the president was seventy-five 
and in his thirty-fourth year of rule. He had held power longer 
than any other Paraguayan and was five years ahead of Cuba's 
Fidel Castro Ruz for longevity in office in the hemisphere. Among 
contemporary international leaders, only Kim II Sung of the 
Democratic People's Republic of Korea (North Korea) and Todor 
Zhivkov of Bulgaria had been in power longer. When Stroessner 
first took office in August 1954, Juan Domingo Peron was presi- 
dent of Argentina, Getulio Dornelles Vargas was president of Brazil, 
and Dwight D. Eisenhower was president of the United States. 

Stroessner' s enduring power was based on the twin pillars of the 
armed forces and the Colorado Party. The former — from which 
he emerged and in which he maintained positions as commander 
in chief of the armed forces and commander in chief of the army — 
provided the institutional base for order and stability. The latter, 
of which he wrested control in the mid-1950s, furnished the links 
with large sectors of society, provided for mobilization and sup- 
port, and allowed him to legitimate his rule through periodic elec- 
tions. The overall system, based on these two institutional pillars, 
functioned through a combination of coercion and cooptation 
involving a relatively small sector of the population in the slightly 
industrialized and partly modernized country. 

As Stroessner and the enduring small group of supporters around 
him aged, the regime was increasingly unable to respond to popu- 
lar demands to begin a transition toward democracy, despite much 
speculation in the mid-1980s that change was in the air. The 
demands for change originated from a variety of sources, both for- 
eign and domestic. As the neighboring republics of Argentina, 
Bolivia, Brazil, and Uruguay underwent political transitions from 
authoritarian to democratic regimes in the early 1980s, Paraguay 
was often considered with Chile, on the far side of the Andes, the 
only remaining analogous regime in South America. Pressure from 
these new democracies for a similar transition in Paraguay was low; 
however, in the 1980s the United States was clearly in favor of a 
political opening for a peaceful transition in the post- Stroessner 



159 



Paraguay: A Country Study 

era. Support for democracy with broad participation, as well as 
a pointed critique of the Stroessner regime's human rights poli- 
cies, also were prominent in the speeches of Pope John Paul II dur- 
ing his visit to Paraguay in May 1988. 

In addition to the external isolation and foreign pressure, there 
were important internal pressures for a transition. After very high 
rates of economic growth in the 1970s, Paraguay's economy stag- 
nated in the 1980s. In addition, the external debt nearly doubled 
during the same period. Within Paraguay the major opposition 
political parties, which had formed a National Accord (Acuerdo 
Nacional) in 1979, began to promote public demonstrations in April 
1986. This growing, heterogeneous movement was joined in its 
opposition by other organizations and movements, including the 
Roman Catholic Church and sectors of business, labor, and univer- 
sity students. 

Despite these pressures, Stroessner was once again nominated 
by the Colorado Party for the 1988 election, although the nomi- 
nation split the party into a number of competing factions. The 
state of siege declared by Stroessner in 1954 was finally lifted in 
April 1987, but opposition politicians and leaders of movements 
were arbitrarily arrested, meetings broken up, and demonstrations 
violendy repressed. With the closing of the daily ABC Color in March 
1984, the weekly El Pueblo in August 1987, and Radio Nandutf 
in January 1987, of the independent media, only the Roman 
Catholic Church's Radio Caritas and its weekly Sender o remained. 
Under these conditions, most opposition parties advocated absten- 
tion or blank voting in the elections. The church also registered 
its reservations on the validity of the elections by admitting the 
acceptability of blank voting. 

Paraguay had had barely two years of democratic rule by law 
in its entire history. It lacked any tradition of constitutional govern- 
ment or liberal democracy to serve as a reference point. Tradition- 
ally, out-of-power groups had proclaimed their democratic 
commitment but repressed their opponents when they took over 
the reins of power. Thus, a transition to democracy for Paraguay 
would not mean a return to a previous status, as in the case of its 
neighbors, but rather the creation of democracy for the first time. 

The Governmental System 

Constitutional Development 

The Republic of Paraguay is governed under the Constitution 
of 1967, which is the fifth constitution since independence from 
Spain in 1811. The Constitutional Governmental Regulations 



160 



Government and Politics 



approved by Congress in October 1813 contained seventeen arti- 
cles providing for government by two consuls, Jose Gaspar 
Rodriguez de Francia and Fulgencio Yegros. The framers also 
provided for a legislature of 1 ,000 representatives. Recognizing the 
importance of the military in the embattled country, the framers 
gave each consul the rank of brigadier general and divided the 
armed forces and arsenals equally between them. Within ten years, 
however, both Yegros and the legislature had been eliminated, and 
Francia ruled until his death in 1840 (see El Supremo Dictador, 
ch. 1). 

In 1841 Francia' s successor, Carlos Antonio Lopez, asked the 
legislature to revise the constitution. Three years later, a new con- 
stitution granted powers to Lopez that were as broad as those un- 
der which Francia had governed. Congress could make and 
interpret the laws, but only the president could order that they be 
promulgated and enforced. The constitution placed no restrictions 
on the powers of the president beyond limiting his term of office 
to ten years. Despite this limitation, Congress subsequently named 
Lopez dictator for life. He died in 1862 after twenty-one years of 
unchallenged rule (see Carlos Antonio Lopez, ch. 1). 

At the end of the disastrous War of the Triple Alliance (1865-70), 
a constituent assembly adopted a new constitution in November 
1870, which, with amendments, remained in force for seventy years. 
The constitution was based on principles of popular sovereignty, 
separation of powers, and a bicameral legislature consisting of a 
Senate and a Chamber of Representatives. Although its tenor was 
more democratic than the two previous constitutions, extensive con- 
trols over the government and the society in general remained in 
the hands of the president. 

In 1939 President Jose Felix Estigarribia responded to a politi- 
cal stalemate by dissolving Congress and declared himself abso- 
lute dictator. To dramatize his government's desire for change, 
he scrapped the constitution and promulgated a new one in July 
1940. This constitution reflected Estigarribia' s concern for stability 
and power and thus provided for an extremely powerful state and 
president. The president, who was chosen in direct elections for 
a term of five years with reelection permitted for one additional 
term, could intervene in the economy, control the press, suppress 
private groups, suspend individual liberties, and take exceptional 
actions for the good of the state. The Senate was abolished and 
the Chamber of Representatives limited in power. A new advisory 
Council of State was created, modeled on the experience of cor- 
poratist Italy and Portugal, to represent group interests including 



161 



Paraguay: A Country Study 

business, farmers, bankers, the military, and the Roman Catholic 
Church. The military was responsible for safeguarding the consti- 
tution. 

After taking power in 1954, President Stroessner governed for 
the next thirteen years under the constitution of 1940. A consti- 
tuent assembly convoked by Stroessner in 1967 maintained the over- 
all framework of the constitution of 1940 and left intact the broad 
scope of executive power. Nevertheless, it reinstated the Senate and 
renamed the lower house the Chamber of Deputies. In addition, 
the assembly allowed the president to be reelected for another two 
terms beginning in 1968. 

The Constitution of 1967 contains a preamble, 11 chapters with 
231 articles, and a final chapter of transitory provisions. The first 
chapter contains eleven "fundamental statements" defining a wide 
variety of topics, including the political system (a unitary republic 
with a representative democratic government), the official languages 
(Spanish and Guaram), and the official religion (Roman Catholi- 
cism). The next two chapters deal with territory, civil divisions, 
nationality, and citizenship. Chapter four contains a number of 
"general provisions," such as statements prohibiting the use of 
dictatorial powers, requiring public officials to act in accordance 
with the Constitution, and entrusting national defense and public 
order to the armed forces and police, respectively. 

Chapter five, with seventy-nine articles, is by far the longest sec- 
tion of the Constitution and deals in considerable detail with the 
rights of the population. This chapter purportedly guarantees the 
population extensive liberty and freedom, without discrimination, 
before the law. In addition to the comprehensive individual rights, 
spelled out in thirty-three articles, there are sections covering social, 
economic, labor, and political rights. For example, Article 111 stipu- 
lates that "The suffrage is the right, duty, and public function of 
the voter. ... Its exercise will be obligatory within the limits to 
be established by law, and nobody can advocate or recommend 
electoral abstention." The formation of political parties is also 
guaranteed, although parties advocating the destruction of the 
republican regime or the multiparty representative democratic sys- 
tem are not permitted. This chapter also specifies five obligations 
of citizens, including obedience to the Constitution and laws, 
defense of the country, and employment in legal activities. 

Chapter six identifies agrarian reform as one of the fundamen- 
tal factors for the achievement of rural well-being. It also calls for 
the adoption of equitable systems of land distribution and owner- 
ship. Colonization is projected as an official program involving not 
only citizens but also foreigners. 



162 



The Legislative Palace, site of meetings of the National Congress 

Courtesy Tim Merrill 

Chapters seven through ten concern the composition, selection, 
and functions of the legislature, executive, judiciary, and attorney 
general, respectively. Chapter eleven discusses provisions for 
amending or rewriting the Constitution. The final chapter con- 
tains transitory articles, the most important of which states that 
for purposes of eligibility and reeligibility of the president, account 
will be taken of only those terms that will be completed since the 
presidential term due to expire on August 15, 1968. The only con- 
stitutional amendment, that of March 25, 1977, modifies this article 
to allow the president to succeed himself without limit. 

The Executive 

The Constitution of 1967 states that government is exercised by 
the three branches in a system of division of powers, balance, and 
interdependence. Nonetheless, in the late 1980s the executive com- 
pletely overshadowed the other two, as had historically been the 
case in Paraguay. The president's extensive powers are defined 
in Article 180. He is commander in chief of the armed forces and 
officially commissions officers up to and including the rank of lieu- 
tenant colonel or its equivalent and, with the approval of the Senate, 
the higher ranks. The president appoints, also with the Senate's 
consent, ambassadors and other officials posted abroad and mem- 
bers of the Supreme Court. Judges at other levels also are named 
by the president following the Supreme Court's approval. The presi- 
dent selects the attorney general after consulting the Council of 
State and with the approval of the Senate. The president also 



163 



Paraguay: A Country Study 

appoints lower level public officials, including the rector of the 
National University, the heads of the Central Bank and the National 
Development Bank, and the members of the Rural Welfare Insti- 
tute (Instituto de Bienestar Rural — IBR) and the National Eco- 
nomic Council. The Constitution has no provision for impeachment 
by the National Congress of either the president or his ministers. 

Only the president can appoint and remove cabinet ministers 
and define functions of the ministries that they head. The Consti- 
tution does not limit the maximum number of ministries but stipu- 
lates that there must be at least five. In 1988 there were ten 
ministries. These were — ranked according to total expenditures for 
1987 — national defense; education and worship; interior; public 
health and social welfare; public works and communications; 
agriculture and livestock; finance; foreign relations; justice and 
labor; and industry and commerce. 

The president also names the members of the Council of State, 
the nature of which is defined under Articles 188 through 192 of 
the Constitution. The Council of State is composed of the cabinet 
ministers, the archbishop of Asuncion, the rector of the National 
University, the president of the Central Bank, one senior retired 
officer from each of the three services of the armed forces, two mem- 
bers representing agricultural activities, and one member each from 
industry, commerce, and labor. The last five members are selected 
from within their respective organizations and their names sub- 
mitted to the president for consideration. All are appointed and 
removed by the president. The Council meets periodically during 
the three months that the National Congress is in recess and can 
meet at other times should the president so request. Its function 
is to render opinions on topics submitted by the president, includ- 
ing proposed decree laws, matters of international politics or of an 
economic or financial nature, and the merits of candidates pro- 
posed for the position of attorney general. Nonetheless, the Coun- 
cil is generally not consulted on important policy decisions. 

In addition to the powers already stipulated, the president has 
the right to declare a state of siege as defined in articles 79 and 
181. The state of siege provision, which was also part of the con- 
stitution of 1940, empowers the president to abrogate constitutional 
rights and guarantees, including habeas corpus, in times of inter- 
nal or external crises. Within five days of a state of siege, the presi- 
dent must inform the National Congress of the reasons for it, the 
rights that are being restricted, and its territorial scope, which may 
include the whole country or only a part. Article 79 stipulates that 
the state of siege can be only for a limited period. Nonetheless, 
when Stroessner came into power in 1954, he declared a state of 



164 



Government and Politics 



siege and had it renewed every three months for the interior of the 
country until 1970 and for Asuncion until 1987. 

The National Congress also granted Stroessner complete discre- 
tion over internal order and the political process through supplemen- 
tal legislation, including the Law for the Defense of Democracy 
of October 17, 1955, and Law 209, "In Defense of Public Peace 
and Liberty of Person," of September 18, 1970. The latter, for- 
mulated in response to perceived guerrilla threats, significantly 
strengthens the executive's hand in dealing with political challenges 
(see Security and Political Offenses, ch. 5). 

In addition to the powers derived from the Constitution, the presi- 
dent also has the right of ecclesiastical patronage. Under the terms 
of a concordat with the Vatican, the state is expected to maintain 
the property of the Roman Catholic Church and support the clergy, 
in return for which the president nominates candidates for all clerical 
offices, including parish priests. Although the president's nomi- 
nations are not strictly binding on the Holy See, historically there 
has been little tendency to ignore his preferences. 

In order to be eligible for the presidency, an individual must 
be a native Paraguayan, at least forty years of age, Roman Catholic, 
and characterized by moral and intellectual features qualifying him 
for the position. The president is chosen for a five-year term in 
direct general elections that must be held at least six months before 
the expiration date of the incumbent's term. The term of office 
begins on August 15, with the first term having begun in 1968. 
There is no provision for a vice president. In the event of the presi- 
dent's death, resignation, or disability, Article 179 provides for con- 
vocation of the National Congress and Council of State within 
twenty-four hours to designate a provisional president. If at least 
two years of the term have elapsed, the provisional president serves 
out the full term of five years. If fewer than two years have elapsed, 
elections are to be held within three months, and the successful 
candidate is to complete the five-year term of office. 

The Legislature 

The National Congress is a bicameral legislature, consisting of 
a popularly elected Senate and Chamber of Deputies. The Con- 
stitution stipulates that the Senate have at least thirty members and 
the Chamber of Deputies sixty, plus alternates. In the 1988 gen- 
eral elections, thirty-six senators and twenty-one alternates were 
elected as well as seventy-two deputies and forty-two alternates. 
The alternates serve in the place of the senators or deputies in the 
case of death, resignation, or temporary disability. The two houses 
meet in regular sessions every year from April 1 to December 20. 



165 



Paraguay: A Country Study 

Special sessions may be convened outside this period by the presi- 
dent, who may also extend the regular sessions. Members of both 
houses must be native-born Paraguayans; whereas deputies need 
be only twenty-five years of age, senators must be at least forty. 
Members of the clergy and armed forces officers on active duty 
may not be elected to the National Congress. Also prohibited are 
those affiliated with a commercial enterprise that operates a pub- 
lic service or has obtained a concession from the government. Mem- 
bers of both houses are elected for five-year terms coinciding with 
terms served by the president. There is no restriction con- 
cerning reelection. 

The functions of the National Congress are stipulated in the 
twenty-one items of Article 149 and include the following: the enact- 
ment, amendment, and repeal of laws; the establishment of politi- 
cal divisions of the country and municipal organizations; the 
authorization for contracting loans in connection with banking, cur- 
rency, and exchange matters; the annual enactment of the national 
budget; the approval or rejection of treaties, conventions, and other 
international agreements; the granting of amnesty; the formula- 
tion of electoral laws; and the approval, modification, or refusal 
of decree laws. The Senate and Chamber of Deputies have dif- 
ferent specific functions. The former deals primarily with the ratifi- 
cation of treaties and national defense, the approval of nomina- 
tions to other organs, and, on the initiative of the Chamber, the 
judgment of members of the Supreme Court of Justice for possi- 
ble removal from office. The Chamber is concerned primarily with 
fiscal or tax issues and bills concerning electoral and muni- 
cipal matters. 

The Constitution, in articles 168 through 170, provides for a 
Standing Committee of the National Congress. Before adjourn- 
ing in December, the National Congress appoints from among its 
members six senators and twelve deputies to act until the follow- 
ing session as the Standing Committee. This committee elects its 
own officers and may conduct a valid session with the presence 
of a simple majority of its members. The Standing Committee has 
the power to ensure that the Constitution and its laws are observed; 
to receive the returns on the election of the president, senators, 
and deputies and pass them on to the National Congress; to con- 
voke sessions to examine election returns on senators and deputies 
so that the National Congress may meet at the proper time; and 
to exercise any other powers assigned to it by the Constitution. 

All bills submitted to the National Congress by the executive 
are discussed and acted upon in the same session, unless they have 
been returned because of lack of time to consider them. If the 



166 



Stroessner campaign posters, Asuncion 
Courtesy Tim Merrill 

executive objects to a bill or part of a bill, it is returned to the cham- 
ber of origin, which studies the objections and states its judgment. 
When this action has been taken, the bill is sent to the other chamber 
for the same purpose. If both chambers uphold the original sanc- 
tion by an absolute majority vote, the executive branch must 
promulgate it. If the two chambers disagree on the objections, 
however, the bill is not reconsidered in that session of the National 
Congress. Any bill completely rejected by the executive may be 
considered again at the same session of the National Congress only 
by an affirmative vote of a two-thirds majority of both chambers. 
In that case, the bill is reconsidered, and, if an absolute majority 
is obtained again in the two chambers, it is promulgated by the 
executive. If a bill that has been approved by one chamber is totally 
rejected by the other, it returns to the former for reconsideration. 
If the chamber of origin ratifies it by an absolute majority, it goes 
again to the chamber that reviews it, and that body can reject it 
again only by a two-thirds absolute majority. If such a majority 
has not been obtained, the bill is considered sanctioned. If the cham- 
ber that reviews a bill approved by the chamber of origin does not 
act upon it within three months, that chamber is considered to have 
given the bill a favorable vote, and it is forwarded to the executive 
to be promulgated. 

In practice, the legislature is controlled tightly by the executive. 
The president sets the legislative agenda and provides most of the 
bills considered by the National Congress. When the National Con- 
gress passes one of the bills submitted by the executive, it does so 



167 



Paraguay: A Country Study 

in general terms as a broad grant of power, leaving it to the execu- 
tive to " issue rules and instructions" for the law's application. In 
addition, an executive that encounters a hostile legislature can dis- 
solve it by claiming a constitutional crisis. Although the president 
must call for new elections within three months, in the interim he 
can rule by decree. During the congressional recess, the executive 
also rules by decree, although the National Congress subsequentiy 
may review the president's actions. The president also may extend 
the congressional session or call an extraordinary session. In addi- 
tion, the president's annual budget takes priority over all other legis- 
lation; it must be debated within one month, and it can be rejected 
only by an absolute majority of both houses. 

In addition to constitutionally based limits on the National Con- 
gress, the legislature also was constrained by Stroessner's tight con- 
trol of the ruling Colorado Party. Stroessner supervised personally 
the selection of the party's legislative candidates. Because the 
Colorado Party won a majority of votes in each of the five elec- 
tions between 1968 and 1988, it received a two-thirds majority of 
congressional seats under the governing electoral law, thus ensur- 
ing a compliant legislature for Stroessner. Although opposition par- 
ties could use the National Congress as a forum to question and 
criticize Stroessner's policies, they were unable to affect the out- 
come of government decisions. 

The Judiciary 

Article 193 of the Constitution provides for a Supreme Court 
of Justice of no fewer than five members and for other tribunals 
and justices to be established by law. The Supreme Court super- 
vises all other components of the judicial branch, which include 
appellate courts with three members each in the areas of criminal, 
civil, administrative, and commercial jurisdiction; courts of first 
instance in these same four areas; justices of the peace dealing with 
more minor issues; and military courts (see The Criminal Justice 
System, ch. 5). The Supreme Court hears disputes concerning juris- 
diction and competence before it and has the power to declare 
unconstitutional any law or presidential act. As of 1988, however, 
the court had never declared invalid any of Stroessner's acts. 

Supreme Court justices serve five-year terms of office concur- 
rent with the president and the National Congress and may be reap- 
pointed. They must be native-born Paraguayans, at least thirty-five 
years of age, possess a university degree of Doctor of Laws, have 
recognized experience in legal matters, and have an excellent repu- 
tation for integrity. 



168 



Government and Politics 



Local Government 

Paraguay is a centralized republic with nineteen departments, 
fourteen of which are east of the Rio Paraguay and the remainder 
in the Chaco region (see fig. 1). The capital, Asuncion, is located 
in the Central Department. The central government exerts com- 
plete control over local administration. The departments are headed 
by government delegates (delegados de gobierno) who are appointed 
by the president and report to the minister of interior. Their duties 
are concerned primarily with public order and internal security. 
The departments are divided into municipalities — the local govern- 
ment unit — of which there were 200 in 1988. 

A municipality consisted of a town or village and the surround- 
ing rural area. In order to qualify as a municipality, an area had 
to have a minimum population of 10,000 in 1988, a central town 
or village with a defined geographical area, and sufficient finan- 
cial resources to pay for its municipal needs. 

There is no separate town or city government apart from the 
municipality. The municipality is limited in jurisdiction; it has no 
control over education, police, and social welfare matters or over 
public health except for urban sanitation. Each municipality has 
a presidentially appointed mayor (intendente) who acts as executive 
agent of the municipality. In addition, each municipality has a board 
(junta municipal) elected by local residents for a five-year term of 
office. A rural municipality is supervised by a local company police 
sergeant (sargento de companta) who reports both to the government 
delegate and the minister of interior. 

The Electoral System 

Regulations pertaining to the electoral system, voting, and poli- 
tical parties were found in the Electoral Statute, Law No. 886 of 
December 11, 1981. The statute's 21 chapters and 204 articles 
provided minute detail on virtually all aspects concerning elections. 
Article 1 stipulated that "the suffrage is the right, duty, and pub- 
lic function of the elector. Its exercise is elaborated according to 
this Law." Article 8 specified that the political party obtaining a 
majority of votes would receive two-thirds of the seats in the Con- 
gress, with the remaining one- third divided proportionately among 
the minority parties. According to Article 20, a party must obtain 
10,000 signatures of citizens to be registered. Article 25 proscribed 
parties of communist ideology or those that sought to overthrow 
the regime and its principles. Article 26 prohibited subordination 
to or alliance of parties with parties in other countries, whereas 
Article 27 banned parties and other political organizations from 



169 



Paraguay: A Country Study 

receiving external financial support. Article 49 made voting ob- 
ligatory. Articles 158 and 159 defined the functions and composi- 
tion, respectively, of the Central Electoral Board, the body 
responsible for implementing and interpreting the provisions of the 
Electoral Statute. As with the composition of the National Con- 
gress, the majority party held two-thirds of the seats of the Cen- 
tral Electoral Board. 

Political Dynamics 

In the late 1980s, Paraguay was an authoritarian regime under 
the personalistic control of Stroessner. Whereas Francia took the 
title of The Supreme Dictator (El Supremo Dictador), Carlos 
Antonio Lopez The Most Excellent One (El Excelentisimo), and 
Francisco Solano Lopez The Marshall (El Mariscal), Stroessner 
called himself The Continuer (El Continuador). Indeed, not only 
did Stroessner continue the authoritarian tradition of these three 
nineteenth-century dictators and the twentieth-century examples 
of Estigarribia and Higinio Monnigo, he also remained in office 
for more than three decades. Stroessner assumed power following 
a more open but highly unstable period in Paraguay's history. 

The political instability of the immediate postwar period, cul- 
minating in the civil war in 1947, offered important lessons for most 
Paraguayans. As Riordan Roett and Amparo Menendez-Carrion 
put it: ''Paraguayans have thus learned to equate open politics with 
weakness and authoritarian politics with strength." The personalis- 
tic nature of Stroessner' s regime, which is known as the Stronato, 
is evident in the names of the capital's airport (President Alfredo 
Stroessner International Airport), the second largest city (Puerto 
Presidente Stroessner), and in a prominent neon sign on top of 
a building in the central square of Asuncion that flashes: "Peace, 
Work, Well-being with Stroessner." Stroessner's enduring, active, 
and highly involved control completely determined the workings 
of the structure of government. Not only does the Constitution of 
1967 grant the president extensive powers in relationship to the 
other institutions, but the powers of the central government far 
outweigh those of other levels. Furthermore, Stroessner personally 
picked all important civilian and military personnel. 

Despite the authoritarian nature of his rule, Stroessner argued in 
his speeches that the country had a functioning democracy, pointing 
with pride to the multiparty character of the legislature and the con- 
stitutional requirement of separation of powers. At the same time, 
however, Stroessner insisted on an "authentically Paraguayan 
democracy." Such a democracy required, in Stroessner's view, a 
strong government in order to ensure the state of law. Paraguayan 



170 



Government and Politics 



democracy also meant freedom and security without anarchy and 
terrorism. 

The Twin Pillars of the Stroessner Regime 

Although the Colorado Party emerged triumphant from the civil 
war of 1947, an ongoing struggle among its factions hindered 
governmental continuity. Between 1948 and 1954, six persons 
occupied the presidency. Stroessner, who had become commander 
in chief of the armed forces, was an active participant in the politi- 
cal intrigue of that era and eventually led his troops in a successful 
coup in May 1954 against President Federico Chaves. Two months 
later, Stroessner was selected as a compromise candidate by the 
Colorados, who considered his presidency only a temporary inter- 
lude, and he ran in elections from which other parties were 
excluded. Relying on his control of the armed forces, and with con- 
siderable shrewdness and the constant work for which he was 
famous, Stroessner gained control over the factions of the Colora- 
dos and subordinated the party to his interests. By 1967 all within 
the party had become supporters of Stroessner (see Consolidation 
of the Stroessner Regime, ch. 1). In addition to the control of the 
government itself, the major institutional bases of his rule, and thus 
of the Paraguayan political system, were the armed forces — 
including the national police, a paramilitary force that was under 
the jurisdiction of the Ministry of Interior but was headed by army 
officers — and the Colorado Party. 

The Armed Forces 

Historically in Paraguay, as in virtually all Latin American 
republics, no president has been able to remain in power without 
the support of the armed forces. Between 1936 and 1954, the army 
was the instrument for every change of government. Stroessner 
brought the armed forces under control, thereby reinforcing his 
rule; yet he also skillfully counterbalanced the armed forces with 
the Colorado Party. 

In the late 1980s, the armed forces and the Roman Catholic 
Church were the only national institutions that had maintained con- 
tinuity since independence. Because of the violent upheavals that 
characterized its history, Paraguay had the most uncompromis- 
ingly martial history of any country in Latin America. It resisted 
the Triple Alliance of Argentina, Brazil, and Uruguay for almost 
five years and collapsed only when more than one-half of its total 
population and almost all of its men had been killed (see The War 
of the Triple Alliance, ch. 1). During the 1932-35 Chaco War, 
Paraguay took on a country having three times its human resources 



171 



Paraguay: A Country Study 

and many times its economic resources. Paraguay won a resound- 
ing military victory but at the cost of 8 percent of its total male 
population and subsequent economic ruin (see The Chaco War 
and the February Revolution, ch. 1; The History and Develop- 
ment of the Armed Forces, ch. 5). This violent history hindered 
the development of a genuine aristocracy, thus allowing the officer 
corps to emerge as a social and, to a large extent, an economic elite. 

In addition to his constitutional role as commander in chief of 
the armed forces, Stroessner retained his position as commander 
in chief of the army. A professional soldier recognized for outstand- 
ing service during the Chaco War, Stroessner took his duties as 
armed forces commander particularly seriously. He devoted one 
day a week exclusively to military matters at the headquarters of 
the general staff and made frequent visits to military commands 
throughout the country. Stroessner personally determined all pro- 
motions and transfers, from lieutenant to chief of staff. His long 
and intense involvement with the armed forces, combined with the 
small size of the country and the armed forces, made it possible 
for him to know intimately the officer corps. 

Stroessner' s control was also enhanced by the senior structure of 
the armed forces. The chief of staff, an army general, formally com- 
manded all the troops in the name of the president and was direct- 
ly subordinate to Stroessner. In fact, the chief of staffs position 
was actually that of a liaison officer. The minister of national defense 
was not in the direct chain of command and dealt mainly with 
administrative matters, including budgets, supplies, and the mili- 
tary tribunals (see The Armed Forces in the National Life, ch. 5). 

Through his domination over the appointment and budgetary 
processes of the armed forces, Stroessner sought to prevent the emer- 
gence of an independent profile within the military. Public 
pronouncements of the armed forces were generally limited to 
pledges of unwavering support for the president and commitments 
to fight international communism. High-ranking officers did express 
their concerns regarding the divisions that emerged within the 
Colorado Party in the mid-1980s over the issue of presidential suc- 
cession; nevertheless, these officers all called on Stroessner to seek 
another term in 1988. 

Adrian J. English, an expert on Latin American militaries, con- 
cluded that the organization of the Paraguayan army appeared to 
be based more on political than military considerations. Stroess- 
ner ensured the loyalty of the officer corps by offering them well- 
paid positions and extensive benefits, such as family allowances, 
health care, pensions, and loans. Many officers also acquired wealth 
through control of state enterprises, such as public utilities, ports, 



172 



Government and Politics 



transportation, meat packing, and alcohol distribution. Substan- 
tial information also linked elements in the military to smuggling 
and drug trafficking (see Relations with The United States, this ch.). 

The Colorado Party 

Two conflicting political movements — the Colorado Party and 
the Liberal Party (Partido Liberal — PL) — emerged following the 
departure of Argentine and Brazilian forces in 1876 (see Liberals 
Versus Colorados, ch. 1). The Colorados dominated politics 
between 1876 and 1904, whereas the Liberals governed between 
1904 and 1940. Following the dictatorship of Morinigo and the 
resulting civil war, the divided Colorados returned to power in 1948. 

Upon assuming office in 1954, Stroessner turned the Colorado 
Party into a key element of his rule. Unusual in the Latin Ameri- 
can context, the party was a highly organized, omnipresent, and 
important instrument for the control of society and the function- 
ing of government. The Colorado Party served the interests of the 
Stroessner regime in a number of ways. First, the party sponsored 
numerous rallies and demonstrations, thereby promoting identifi- 
cation of the population with the regime. Speakers at such rallies 
generally employed the language of nationalism, a particularly 
important theme in a small, landlocked country surrounded by more 
powerful neighbors. Second, the party mobilized electoral support 
for government- sponsored candidates. Third, the extensive party 
media, including the daily newspaper Patria and the radio program 
"La Voz del Coloradismo," promoted the government's view of 
national and international events. In addition, the party employed 
its ancillary organizations, which included professional associations, 
veterans' groups, women's federations, peasants' groups, cultural 
societies, and students' clubs, to maintain contact with virtually 
all sectors in the country. 

The Colorado Party's control of jobs in the public and semipublic 
sectors, a particularly important situation in an underdeveloped 
country short of opportunities in the private sector, also enabled 
it to co-opt all potentially significant elements into the regime. Party 
membership was considered necessary for success. Civilian em- 
ployees of the central and local governments, including teach- 
ers and workers in state hospitals, were recruited from within 
the ranks of the party, and party dues were deducted from their 
salaries. Officers in the armed forces also were obliged to join the 
party; indeed, admission to the officer corps was restricted to chil- 
dren of Colorados. In the late 1980s, the party claimed a member- 
ship of 1.4 million, or approximately 35 percent of the total 
population. 



173 



Paraguay: A Country Study 

Colorado local committees (seccionales) were found in every com- 
munity, dispensing jobs and favors to party members. These com- 
mittees, of which there were 243 in 1988 (including 26 in Asuncion), 
met at least once a week and had executive committees of 9 mem- 
bers and 6 alternates who served 3-year terms of office. The local 
committees, which also had more specialized units for laborers, 
peasants, youth, and women, served as the party base and collected 
intelligence. The party also had a rural militia, the py nandi, or 
"barefoot ones," which was estimated to number 15,000. The py 
nandi'were especially active in the 1960s in pursuing guerrilla bands. 

In theory, the highest body in the Colorado Party was the 
National Convention, which convened regularly every three years 
or could be convoked more frequently in the case of crises or to 
nominate slates for elections. The party was actually run, however, 
by the National Committee of the Colorado Party (Junta de 
Gobierno), which consisted of thirty-five members and sixteen 
alternates elected at the National Convention. The National Com- 
mittee maintained contact with the party's ancillary organizations 
and supervised the local committees. The committee also elected 
its own executive consisting of a president, three vice presidents, 
and other officials. The National Committee president set the 
party's agenda, chaired executive meetings, presented the budget, 
called emergency sessions, and represented the party before the 
government or other organizations. 

Given the importance of the Colorado Party in defending the 
Stroessner regime, the National Committee attempted to avoid at 
all costs the emergence of contested leadership lists in local com- 
mittees. When such lists did appear in the mid-1980s, however, 
they ironically reflected cracks that had developed within the 
National Committee itself. The committee split into two main 
camps: militants (militantes) and traditionalists (tradicionalistas) . Mili- 
tants, also known as Stronistas, favored Stroessner' s regime and 
wanted little or no change. They generally felt more loyalty to 
Stroessner personally than to the party. Their leaders included those 
who particularly benefited from the system and perceived it as good 
for themselves and the country. Traditionalists favored a transi- 
tion to a less authoritarian regime. They believed Paraguay was 
moving toward a more open system and wanted the party to play 
a role in the process. Traditionalists stressed the original content 
of Colorado ideology and further emphasized democracy and social 
justice. Many of their leaders were from families who had played 
a major role in the party since the 1940s. 

Both militants and traditionalists were subdivided into several 
factions. Militants broke into two camps: the orthodox (ortodoxo) 



174 




A school in Limpio constructed by the 
'Colorado government of President Stroessner >} 
Courtesy Inter-American Development Bank 



and institutionalists (institucionalistas) . The orthodox favored hav- 
ing Stroessner remain in power until he died, after which his son, 
Air Force Lieutenant Colonel Gustavo Stroessner Mora, would suc- 
ceed. The institutionalists were somewhat more pragmatic. One 
well-known advocate of this position, the minister of public health 
and social welfare, Adan Godoy Jimenez, proposed that Stroess- 
ner stay in power until he died or resigned, at which time a civi- 
lian or military figure with the same orientation would assume 
power. 

Traditionalists were even more fragmented than were militants. 
The traditionalist group closest to the regime, at least prior to the 
rupture of 1987, was led by Juan Ramon Chaves, the octogenarian 
president of the party for twenty-five years and president of the Sen- 
ate, who symbolized the link to the pre- Stroessner period. The ethi- 
cals (eticos) coalesced around National Committee member Carlos 
Romero Arza, the son of Tomas Romero Pereira, architect of the 
party's alliance with Stroessner in 1954. In a September 1985 
speech, Romero Arza called attention to the lack of political ethics 
in the party. He denounced corruption and bad management, 
blaming opportunists who had joined the party during the Stroess- 
ner regime as a way to enrich themselves. Romero Arza urged a 
return to the traditional values that inspired previous Colorado 



175 



Paraguay: A Country Study 

governments and called for political dialogue between the party 
and the political opposition. 

Two additional factions formed in 1987. One — the Movement 
for Colorado Integration (Movimiento de Integration Colorado — 
MIC), also called the Group of Thirty-four — was composed of long- 
standing Colorados who had retired from public life. Led by Edgar 
L. Ynsfran, a former minister of interior, the MIC advocated a 
reassertion of the authority of the National Committee and a restruc- 
turing of the party to confront the opposition in a more open sys- 
tem. Another faction — the National and Popular Movement 
(Movimiento Nacional y Popular) — was led by congressman and 
Colorado intellectual Leandro Prieto Yegros and proposed to act 
as a bridge between the traditionalists and the militants. 

Colorado Party factionalism broke into public prominence fol- 
lowing elections in late 1984 for members of the National Com- 
mittee. Mario Abdo Benitez, a militant and Stroessner's private 
secretary for twenty years, had expected to be elected the first vice 
president in recognition of his support of the Stronato. After Abdo 
Benitez was unexpectedly defeated at the National Convention, 
his followers carried on their fight at the local committee level. Con- 
flicts became public in some towns, with rival groups of Colora- 
dos accusing each other of rigging the party elections and appealing 
for support from different members in the National Committee. 

The conflict took a dramatic turn in early 1986 when the ethi- 
cals publicly opposed Stroessner's bid for yet another term of office 
and openly called for a civilian Colorado Party candidate in the 
1988 elections. They were later joined by the MIC in this appeal. 
This action represented the first time since 1959 that an organized 
sector of the party openly opposed Stroessner. In April 1986, 
Stroessner acknowledged the divisions in the party and denounced 
the ethicals and the MIC as "deserters." In retaliation for the ethi- 
cals' stance, Stroessner fired Romero Arza from his position at the 
National Development Bank and forced him to resign from the 
Council of State. Those around him became politically isolated and 
had to stand on the sidelines at the regular National Convention 
in August 1987. 

In May 1987, the militants presented their slate of four candi- 
dates for the presidency and three vice presidencies of the Nation- 
al Committee. The slate was headed by Sabino Au gusto 
Montanaro, minister of interior since 1968, and also included Beni- 
tez, Godoy, and Jose Eugenio Jacquet, minister of justice and labor. 
In 1976 Montanaro had been excommunicated by the Roman 
Catholic Church for allowing the police to torture church workers 
who were involved in rural protests. Although the militants had 



176 



Government and Politics 



captured control of a majority of the local committees and thus 
appeared headed for a solid victory at the National Convention, 
Montanaro decided to leave nothing to chance. A few hours before 
the convention was to begin, the police arrived at the building where 
it was to be held and restricted access to the militants and those 
from the National and Popular Movement, who by then had 
endorsed the militants' slate. Although Chaves, who was still the 
party's president and was the nominee of the traditionalists, declared 
the proceedings invalid, the militants went ahead with the conven- 
tion and captured the four leadership posts and all other seats on 
the National Committee. Within two weeks, Stroessner had 
endorsed the militants' victory and claimed that it was a legitimate 
expression of the Colorado majority. 

The militants' victory at the National Convention was repeated 
in November 1987, when the party held a nominating convention 
for the presidential and congressional election scheduled for Febru- 
ary 1988. The 874 militant delegates unanimously chose Stroess- 
ner to be the Colorado Party standard-bearer and drew up a slate 
of congressional candidates that excluded traditionalists. These vic- 
tories were achieved, however, at the cost of aggravated divisions 
in the party, itself a key component of the regime's infrastructure. 

By mid- 1988 Stroessner had given no indication of choosing a 
likely successor. Observers assumed that the party, in conjunction 
with the armed forces, would play a vital role in the succession 
process. Yet although Stroessner clearly supported the militant wing 
of the party, most observers believed that the militants lacked close 
contacts with the armed forces. 

Opposition Parties 

The existence of many factions within the Colorado Party did 
not indicate real pluralism but rather the fragmentation of an old 
political movement that had enjoyed both the benefits and the 
stresses of supporting a personalized authoritarian rule. By the same 
token, the existence of opposition political parties could not be con- 
sidered evidence of true representative democracy. 

Opposition parties faced formidable obstacles in attempting to 
challenge Colorado Party control. For example, the Colorado 
Party's virtual monopoly on positions and patronage made it 
difficult for other parties to obtain the necessary numbers of sig- 
natures for legal recognition. In addition, the Colorados held a two- 
thirds majority on the Central Electoral Board. At the same time, 
however, the government needed the political participation of at 
least some opposition parties in order to support the posture of 
democracy. The Constitution reserves one-third of the congressional 



177 



Paraguay: A Country Study 

seats for opposition parties, regardless of their share of the vote. 
Even so, most of the opposition did not participate in elections; 
indeed, only three opposition parties — the PL, the Radical Liberal 
Party (Partido Liberal Radical — PLR), and the Febrerista Revolu- 
tionary Party (Partido Revolucionario Febrerista — PRF) — had legal 
recognition in the late 1980s. 

Between 1947 and 1962, the Colorado Party was the only legal 
party. With the consolidation of Stroessner's power and the prod- 
ding of the administration of United States president John F. 
Kennedy, however, in 1962 the general granted legal standing to 
a Liberal splinter group, the Renovation Movement (Movimiento 
Renovacion). The Renovationists participated in the 1963 elections; 
as the president's loyal opposition, they began to enjoy some of 
the privileges formerly reserved only for the Colorados. In 1967, 
after two decades in exile, the PLR accepted Stroessner's offer of 
legal participation and returned to participate in elections. In 1976 
the two Liberal factions unsuccessfully sought to form a single party; 
the Renovation Movement then changed its name to the Liberal 
Party. The other legal party, the PRF, was organized following 
Colonel Rafael Franco's overthrow of the Liberal Party in 1936. 
The PRF, more commonly known as the Febreristas, received le- 
gal recognition in 1965. The Febreristas affiliated with the Socialist 
International in 1965 and claimed to have 50,000 active members 
in 1986. 

In the early 1970s, the Febreristas and the bulk of the PLR with- 
drew from elections following their refusal to endorse the constitu- 
tional amendment allowing Stroessner to stand for unlimited 
reelection. The breakaway faction of the PLR lost its legal status 
and renamed itself the Authentic Radical Liberal Party (Partido 
Liberal Radical Autentico— PLRA). Thus, the PLR and the 
remaining wing of the PL were the only challenges to the Colorado 
Party in the elections of 1973, 1978, 1983, and 1988 (see table 8, 
Appendix). The PLR and PL thereby were entitled to occupy one- 
third of the seats in the National Congress, although their com- 
bined average vote in the elections was only 10 percent. Neither 
had the organization, finances, or human resources to oppose the 
Colorados effectively. 

In addition to the PLRA, other nonlegal parties included the 
Christian Democratic Party (Partido Democrata Cristiano — PDC) 
and the Colorado Popular Movement (Movimiento Popular 
Colorado — Mopoco). The PDC was founded in 1960. The govern- 
ment allowed the legalization of parties in the early 1960s but 
required new ones to have 10,000 members. Although the PDC 
lacked the necessary members, it claimed that it was exempt from 



178 



PLRA leader Domingo Lai'no 
Courtesy Richard S. Sacks 



the new law because the party had already existed before the law 
was passed. The government rejected this argument, however, 
contending that the law was based on a 1959 decree law. The 
government's contention was upheld by the Supreme Court. 

Mopoco was founded in 1959 by Colorados who had served in 
the administration of Federico Chaves, Stroessner's predecessor. 
The party leadership was forced into exile because of continued 
opposition to Stroessner and did not return to Paraguay until 1981 
under an amnesty provision. The leaders discovered subsequently, 
however, that the amnesty did not truly reflect a change in govern- 
ment policy, as they became subject once again to harassment 
and imprisonment. In addition, because Mopoco was not a legally 
recognized political party, it could not communicate with the 
electorate. 

In 1979 the Febreristas, PLRA, PDC, and Mopoco founded 
the National Accord. All claimed to be center left and reform- 
ist, and they were carefully and vocally anti-Marxist. The Accord's 
fourteen-point platform stressed the need for nonradical but 
basic reforms, including an end to the state of siege, freedom 
for political prisoners, amnesty for exiles, respect for human 
rights, elimination of repressive legislation, and a broadly represen- 
tative government that would prepare society for free elections 
within two years. Specifically to further free elections, the Accord 
called for the abolition of the Electoral Statute. Despite government 



179 



Paraguay: A Country Study 

attempts to destroy the momentum of the Accord by expel- 
ling PLRA leader Domingo Laino in December 1982, the Accord 
held together. 

The Accord benefited from the legal status of the Febreristas. 
As a legally recognized party, the Febreristas could hold meetings 
and rallies, offer an umbrella to the other members of the Accord, 
and publish — until 1987 — a weekly newspaper, El Pueblo. Nonethe- 
less, the police often used force to break up Accord rallies and arrest 
its leadership. The human rights organization Americas Watch 
charged that eighty-four Accord political activists had been arbitrar- 
ily arrested between early 1985 and March 1986. In addition, com- 
ponent parties of the Accord were often divided not only among 
themselves but also internally (see Political Developments Since 
1986, this ch.). In July 1987, a new party, the Popular Democra- 
tic Movement (Movimiento Democratico Popular — MDP), was 
formed. The MDP strongly criticized the regime, oriented itself 
toward the lower classes, and offered a program to the left of the 
National Accord parties. 

The Paraguayan Communist Party (Partido Comunista Para- 
guayo — PCP) was less significant than other opposition political 
parties, was excluded from the National Accord, and had been iso- 
lated historically from other parties, even in exile. It was proscribed 
by the 1955 Law for the Defense of Democracy, Law 209 of 1970, 
and the Electoral Statute. The tight control of the political environ- 
ment and the presence of the Colorado Party local committees in 
even small communities virtually prohibited the radical left's 
penetration in Paraguay (see Security and Political Offenses, ch. 5). 

Political Developments Since 1986 

The splits in the Colorado Party in the 1980s and the conditions 
that led to this — Stroessner's age, the character of the regime, the 
economic downturn, and international isolation — provided an 
opportunity for demonstrations and statements by the opposition 
prior to the February 1988 general elections. In addition, the offi- 
cial attitude to human rights benefited somewhat as Stroessner 
attempted to improve his image abroad. In March 1986, for 
example, Stroessner met with an Americas Watch delegation, the 
first time he had ever received a human rights group. Two years 
earlier, another Americas Watch delegation had been arrested and 
expelled from the country upon arrival. The state of siege was also 
allowed to lapse in Asuncion in April 1987. 

The PLRA leader Laino served as the focal point of the opposi- 
tion in the second half of the 1980s. The government's effort to 
isolate Laino by exiling him in 1982 had backfired. In fact, Laino 



180 



Government and Politics 



received considerable international attention during five unsuccess- 
ful attempts to return to Paraguay. On his fifth attempt, in June 
1986, Lamo returned on a Uruguayan airliner with three televi- 
sion crews from the United States, a former United States ambas- 
sador to Paraguay, and a group of Uruguayan and Argentine con- 
gressmen. Despite the international contingent, the police violently 
barred Laino's return. The police action dashed hopes that Stroess- 
ner's meeting three months earlier with the Americas Watch 
representatives presaged a substantial liberalization of govern- 
ment policy. 

In response to increased pressure from the United States, 
however, the Stroessner regime relented in April 1987 and per- 
mitted Laino to arrive in Asuncion. Lamo took the lead in organiz- 
ing demonstrations and diminishing somewhat the normal oppo- 
sition party infighting. The opposition was unable to reach agree- 
ment on a common strategy regarding the elections, with some par- 
ties advocating abstention and others calling for blank voting. 
Nonetheless, the parties did cooperate in holding numerous light- 
ning demonstrations (mitines reldmpagos), especially in rural areas. 
Such demonstrations were held and disbanded quickly before the 
arrival of the police. 

The elections of 1988 provided the opportunity for two organiza- 
tional innovations. The first was the establishment of the MDP 
(see Opposition Parties, this ch.). In addition, the Accord groups, 
which now expanded to include the Colorado ethicals and some 
labor and student movements, organized a National Coordinat- 
ing Committee for Free Elections to monitor the political situa- 
tion, expose what they termed the "electoral sham," and encourage 
either abstention or blank voting. 

Obviously stung by the upsurge in opposition activities, Stroess- 
ner condemned the Accord for advocating "sabotage of the general 
elections and disrespect of the law" and used the national police 
and civilian vigilantes of the Colorado Party to break up demon- 
strations. A number of opposition leaders were imprisoned or other- 
wise harassed. Hermes Rafael Saguier, another key leader of the 
PLRA, was imprisoned for four months in 1987 on charges of 
sedition. In early February 1988, police arrested 200 people 
attending a National Coordinating Committee meeting in Coronel 
Oviedo. Forty-eight hours before the elections, Laino and several 
other National Accord members were placed under house arrest. 

During the six weeks of legal campaigning before the elections, 
Stroessner addressed only three Colorado rallies. Despite limited 
campaign activities, the government reported that 88.7 percent of 
the vote went to Stroessner, 7.1 percent to PLR candidate Luis 



181 



Paraguay: A Country Study 

Maria Vega, and 3.2 percent to PL candidate Carlos Ferreira 
Ibarra. The remaining 1 percent of ballots were blank or annulled. 
The government also reported that 92.6 percent of all eligible voters 
cast their ballots. The National Coordinating Committee rejected 
the government's figures, contending that abstention was as high 
as 50 percent in some areas. In addition, election monitors from 
twelve countries, including the United States, France, Spain, Brazil, 
and Argentina, reported extensive irregularities. 

Shortly after the elections, researchers from the Catholic Univer- 
sity of Our Lady of Asuncion and the West German Friedrich Nau- 
mann Foundation released the findings of a public opinion poll that 
they had conducted several weeks earlier. The poll, which mea- 
sured political attitudes of urban Paraguayans — defined as those 
living in towns with at least 2,500 residents — suggested that the 
Colorado Party had considerable support, although nowhere near 
the level of official election statistics. Asked for whom they would 
vote in an election involving the free participation of all parties 
and political movements, 43 percent named the Colorado Party; 
the PLRA, which finished second in the poll, was mentioned by 
only 13 percent of all respondents. (The two "official" opposition 
parties, the PLR and the PL, trailed badly with only 2.9 percent 
and 2.7 percent, respectively.) Stroessner's name also topped the 
list of those political leaders considered most capable of leading the 
country; indeed, after Lamo, who finished second in the list, 
Colorado traditionalists, militants, and ethicals captured the next 
five positions. 

Although contending that these results reflected the Colorados' 
virtual monopoly of the mass media, opposition politicians also saw 
several encouraging developments. Some 53 percent of those polled 
indicated that there was an "uneasiness" in Paraguayan society. 
Furthermore, 74 percent believed that the political situation needed 
changes, including 45 percent who wanted a substantial or total 
change. Finally, 31 percent stated that they planned to abstain from 
voting in the February elections. 

Relations between militants and traditionalists deteriorated seri- 
ously in the months following the elections. Although Chaves and 
his followers had not opposed Stroessner's reelection bid, Mon- 
tanaro denounced them as "legionnaires" — a reference to those 
Paraguayan expatriates who fought against Francisco Solano Lopez 
and who were regarded as traitors by the original Colorados (see 
The Postwar Period, ch. 1). Prominent traditionalists, among them 
the head of the Central Electoral Board and the minister of for- 
eign relations, lost their government positions. Luis Maria Argafia 
left his post as chief justice of the Supreme Court following the 



182 




The poster reads "Stroessner: Peace and Progress, 1988-1993" 

Courtesy Richard S. Sacks 



completion of his five-year term and was replaced by a militant. 
Argafia attempted to distance himself somewhat from his tradition- 
alist colleagues by claiming that he had not authorized his name 
to appear on a traditionalist list prior to the August 1987 conven- 
tion; nonetheless, most observers thought that he was the most likely 
candidate to succeed Chaves as head of the movement. By late 1988 
the only major agencies still headed by traditionalists were the IBR 
and the National Cement Industry (Industria Nacional de 
Cemento). In September 1988, traditionalists responded to these 
attacks by accusing the militants of pursuing "a deceitful populism 
in order to distract attention from their inability to resolve the seri- 
ous problems that afflict the nation." Traditionalists also called 
for an end to personalism and corruption. 

The Colorado Party was not the only political group confronted 
by internal disputes in the late 1980s. The PLRA had two major 
currents; Laino headed the Liberation for Social Change (Libera- 
tion para Cambio Social), whereas Miguel Abdon Saguier led the 
Popular Movement for Change (Movimiento Popular para el Cam- 
bio). Despite the efforts of PDC founder Luis Alfonso Resck, a 
bitter leadership struggle erupted within that party in late 1988. 
Finally, the PRF found itself in the middle of an acrimonious bat- 
tle between the Socialist International and the Latin American 
Socialist Coordinating Body. 



183 



Paraguay: A Country Study 



Interest Groups 

The Roman Catholic Church 

Social life in Paraguay had always been closely tied to religion, 
but politically the Roman Catholic Church traditionally had 
remained neutral and generally refrained from commenting on 
politics. In the late 1960s, however, the church began to distance 
itself from the Stroessner regime because of concerns over human 
rights abuses and the absence of social reform. The Auxiliary Bishop 
of Asuncion, Anibal Maricevich Fleitas, provided an early focus 
for criticism of the regime. With the growth of the Catholic Univer- 
sity and the influx of Jesuits from Europe, especially Spain, the 
church had a forum and a vehicle for reform as well as a dynamic 
team of spokespeople. Some priests moved into the poor neigh- 
borhoods, and they, along with others in the rural areas, began 
to encourage the lower classes to exercise the political rights guaran- 
teed in the Constitution. These priests and the growing Catholic 
Youth movement organized workers and peasants, created Chris- 
tian Agrarian Leagues and a Christian Workers' Center, and pub- 
licized the plight of the Indians. As part of the program of education 
and awareness, the church founded a weekly news magazine, 
Comunidad, and a radio station that broadcast throughout the 
country. 

In April 1968, the regime reacted against this criticism and 
mobilization by authorizing the police to invade the university, beat 
students, arrest professors, and expel four Jesuits from the coun- 
try. Although the Paraguayan Bishops' Conference (Conferencia 
Episcopal Paraguay a — CEP) met and issued a blistering statement, 
the regime was not deterred from continuing its crackdown on the 
church. The Stroessner government arrested church activists, shut 
down Comunidad, disbanded Catholic Youth rallies, outlawed the 
Catholic Relief Service — the church agency that distributed 
assistance from the United States — and refused to accept Maricevich 
as successor when Archbishop Anibal Mena Porta resigned in 
December 1969. 

The following January, the government and church reached an 
agreement on the selection of Ismael Rolon Silvero as archbishop 
of Asuncion. This resolution did not end the conflict, however, 
which resulted in continued imprisonment of university students, 
expulsions of Jesuits, and attacks on the Christian Agrarian 
Leagues, a Catholic preparatory school, and even the offices of the 
CEP. Rolon stated that he would not occupy the seat on the Council 
of State provided by the Constitution for the archbishop of Asun- 
cion until the regime restored basic liberties. 



184 



Government and Politics 



In the 1970s, the church, which was frequently under attack, 
attempted to strengthen itself from within. The church promoted 
the establishment of peasant cooperatives, sponsored a pastoral pro- 
gram among students in the Catholic University, and endorsed the 
creation of grassroots organizations known as Basic Christian Com- 
munities (Comunidades Eclesiasticas de Base — CEBs). By 1986 
there were 400 CEBs consisting of 15,000 members. These 
organizational efforts, combined with dynamic regional efforts by 
the church symbolized in the Latin American Episcopal Confer- 
ence (Conferencia Episcopal Latinoamericana — Celam) meeting 
in Puebla, Mexico, in 1979, resulted in a renewed commitment 
to social and political change. Following the Puebla conference, 
the Paraguayan Roman Catholic Church formally committed it- 
self to a ' 'preferential option for the poor, ' ' and that year the CEP 
published a pastoral letter, "The Moral Cleansing of the Nation," 
that attacked growing economic inequalities and the decline of moral 
standards in public life. In 1981 the CEP released a detailed plan 
for social action. Two years later, the bishops issued a pastoral let- 
ter denouncing increasing evictions of peasants. 

By the early 1980s, the church had emerged as the most impor- 
tant opponent of the Stroessner regime. The CEP's weekly 
newspaper, Sendero, contained not only religious information but 
also political analysis and accounts of human rights abuses. The 
church's Radio Caritas was the only independent radio station. 
Church buildings and equipment were made available to govern- 
ment opponents. In addition, the bishops joined with leaders of 
the Lutheran Church and Disciples of Christ Church to establish 
the Committee of the Churches. This committee became the most 
important group to report on human rights abuses, and it also 
provided legal services to those who had suffered such abuse. 

Keeping an eye on the post- Stroessner political situation and con- 
cerned to bring about a peaceful democratic transition, the CEP 
began in 1983 to promote the idea of a national dialogue to in- 
clude the Colorado Party, business, labor, and the opposition par- 
ties. This concept was endorsed by the National Accord, which 
demanded constitutional reforms designed to create an open, 
democratic, pluralist, and participatory society. The Colorado Party 
rejected the calls for dialogue, however, on the grounds that such 
action was already taking place in the formal structures of govern- 
ment at national and local levels. 

In the late 1980s, the church was better able to respond in a united 
manner to criticism and repression by the regime than had been 
the case in the late 1960s and early 1970s. Five days after the sus- 
pension of the state of siege in Asuncion in 1987, police broke up 



185 



Paraguay: A Country Study 

a Holy Week procession of seminarians who were dramatizing the 
predicament of peasants who had no land. Rolon denounced this 
police action. In October 1987, the clergy and religious groups of 
Asuncion issued a statement that condemned the preaching of 
hatred by the Colorado Party's radio program "La Voz del 
Coloradismo," demanded the dismantling of assault squads made 
up of Colorado civilians, and called for respect for civil rights and 
a national reconciliation. Later that month, the church organized 
a silent march to protest government policies. The march, which 
attracted between 15,000 and 30,000 participants, was the largest 
public protest ever staged against the regime and demonstrated the 
church's impressive mobilization capabilities. 

Critical statements by the church increased with the approach 
of the 1988 general elections and with the government's continued 
refusal to participate in the national dialogue. In January 1988, 
the CEP issued a statement on the current situation, calling atten- 
tion to the government's use of corruption, violence, and repres- 
sion of autonomous social organizations. The bishops warned of 
increasing polarization and violence and indicated that blank vot- 
ing in the upcoming elections was a legitimate political option, a 
position frequently denounced by Stroessner and the Colorado 
Party. The archbishopric of Asuncion followed up in February by 
issuing a document rejecting the government's accusations of church 
involvement in politics and support for opposition parties. Immedi- 
ately after the elections, Rolon granted an interview to the Argen- 
tine newspaper Clarin, in which he blamed the tense relations 
between church and regime on the government's use of violence. 
He criticized the government for its disregard of the Constitution, 
harassment of political opponents, and refusal to participate in the 
national dialogue, and he charged that the elections were farcical. 

In the confrontational atmosphere after the elections, the visit 
by Pope John Paul II to Paraguay in May 1988 was extremely im- 
portant. The government rejected the church's plans to include 
Concepcion on the papal itinerary, claiming that the airport run- 
way there was too short to accommodate the pope's plane. 
Maricevich, who now headed the diocese of Concepcion, charged, 
however, that the city had been discriminated against throughout 
the Stroessner era as punishment for its role in opposing General 
Higinio Mormigo in the 1947 civil war. The pope's visit was almost 
cancelled at the last moment when the government tried to pre- 
vent John Paul from meeting with 3,000 people — including 
representatives from unrecognized political parties, labor, and com- 
munity groups — dubbed the "builders of society." After the govern- 
ment agreed reluctantiy to allow the meeting, the Pope arrived in 



186 



Graffiti in Asuncion: "Ten o'clock at the cathedral. 
Enough of the repression. We demand liberty. " 

Courtesy Richard S. Sacks 

Asuncion and was received by Stroessner. Whereas Stroessner spoke 
of the accomplishments of his government and the recent free elec- 
tions, the Pope called for a wider participation in politics of all sec- 
tors and urged respect for human rights. Throughout his three-day 
trip, John Paul stressed human rights, democracy, and the right 
and duty of the church to be involved in society. His visit was seen 
by observers as supporting the Paraguayan Roman Catholic 
Church's promotion of a political transition, development of grass- 
roots organizations, and defense of human rights. 

Business 

The business sector was a relatively weak interest group and 
generally supported the government. The local business commu- 
nity was quite small, reflecting both the country's low level of 
industrialization and the presence of many foreign-owned finan- 
cial institutions and agro-processing firms. Although local business- 
men traditionally supported the Liberal Party, the political and 
monetary stability of the Stronato appealed to business leaders and 
made them cooperate closely with the Colorado Party and the 
government. Furthermore, businesses that strongly supported the 
government accrued considerable financial benefits, whereas those 
who were uncooperative placed their businesses in jeopardy. In 



187 



Paraguay: A Country Study 

an effort to increase its influence over the business sector, the 
government encouraged the formation of associations of business- 
men and industrialists. The two leading business associations — 
the Federation of Production, Industry, and Commerce (Federa- 
cion de la Produccion, la Industria, y el Comercio — Feprinco) and 
the Paraguayan Industrial Union (Union Industrial Paraguaya — 
UIP) — each had seats on the Council of State. The Colorado Party 
also maintained relations with the business sector through its 
ancillary organizations. 

The business sector began to define some independence from the 
government, however, following the country's economic slump in 
the early and mid-1980s and a perceived lack of government 
response to the problem. For example, Feprinco president Alirio 
Ugarte Diaz spoke out against the government's economic policies, 
asking for action in reviving the economy and eliminating corrup- 
tion. Although neither the Feprinco nor the UIP participated in the 
national dialogue in 1987, both submitted requests to the govern- 
ment for major policy changes to reverse the economic slump. 

Urban Labor 

Labor has not been an organized, tightly knit, autonomous force 
in Paraguay. The firms have traditionally been small, workers were 
not politically active, and personal relationships between employ- 
ers and employees prevailed. As in other Southern Cone (see Glos- 
sary) countries, the paternal state anticipated demands of a growing 
labor force, granted some benefits, and impeded the formation of 
strong labor organizations. When Stroessner came to power, most 
of organized labor belonged to the Paraguayan Confederation of 
Workers (Confederation Paraguaya de Trabajadores — CPT), an 
unstructured amalgam of trade unions. Despite its loose associa- 
tion with the Colorado Party, the CPT declared a general strike 
in 1958. Stroessner crushed the strike, dismissed the CPT leader- 
ship, and appointed a police officer as its head. Consistent with 
these actions, the government, and not the workers, continued to 
determine the confederation's leadership in the late 1980s. 

The CPT remained the only legally recognized large labor 
organization; it contained 60,000 members and claimed to represent 
90 percent of organized labor. The CPT's refusal to endorse strikes 
after 1959 reflected the government's dominance over it. In 1985 
the CPT lost its membership in the International Labour Organi- 
sation (ILO) after an ILO delegation to Paraguay determined that 
the CPT was neither independent nor democratic. Nonetheless, 
the CPT's existence allowed the labor force some access to govern- 
ment officials. 



188 



Government and Politics 



The first attempt to reform the labor movement came in 1979 
with the emergence of the Group of Nine trade unions. The group, 
which included bank workers, a sector of construction workers, and 
the outlawed journalists' union, unsuccessfully attempted to take 
control of the CPT in March 1981. Several unions of the group 
subsequently broke away from the CPT and in 1982 led a success- 
ful national boycott of Coca Cola in order to reinstate trade union 
members at the bottling plant. From this effort emerged the Inter- 
Union Workers Movement (Movimiento Intersindical de Tra- 
bajadores — MIT) in 1985. The MIT received recognition from both 
the International Confederation of Free Trade Unions and the Latin 
American Central Organization of Workers (Central 
Latinoamericana de Trabaj adores — Clat), both of which sent 
representatives to express their support for the new movement. In 
the late 1980s, the MIT remained small, and its members were 
subject to harassment and imprisonment; nevertheless, it was still 
the only independent labor movement since Stroessner took power. 

Rural Labor 

For most of the Stronato, the government could rely on a sup- 
portive peasantry. Linked through the local committees of the 
Colorado Party, many peasants participated in the land coloniza- 
tion programs of the eastern border region that were sponsored 
by the government's IBR. Others bypassed the IBR altogether and 
participated independently in the settlement of the area (see Land 
Reform and Land Policy, ch. 3). In any event, the availability of 
land served to alleviate somewhat the frustration of peasants who 
were in a poor economic situation. 

In the 1970s and early 1980s, a number of factors contributed 
to a dramatic reduction of land in the eastern border region. First, 
an estimated 300,000 to 350,000 Brazilians crossed into Paraguay 
in search of cheap land (see Immigrants, ch. 2). Second, many 
squatters were forced off their lands by new agribusinesses that were 
much more efficient than the previous operators of estates. In 
addition, the completion of the Itaipu hydroelectric project resulted 
in high unemployment of construction workers, many of whom 
were former peasants. As a result, an estimated 200,000 families 
lacked title to their land or had no land at all. 

In about 1980, landless peasants began to occupy land illegally. 
Although some settlements were smashed by the government, others 
eventually received formal recognition by the IBR. A number of 
rural organizations also sprang up after 1980 to promote the in- 
terests of peasants. Although one of these organizations — the Coor- 
dinating Committees of Agricultural Producers (Comites de 



189 



Paraguay: A Country Study 



Coordination de Productores Agricolas) — was sponsored by the 
government, its leaders sometimes assumed positions not in line 
with official policy. Associations of peasants sponsored by the 
Roman Catholic Church were formed to establish cooperatives and 
commercialize crop production. A variety of rural organizations 
loosely grouped themselves into the Paraguayan Peasant Move- 
ment (Movimiento Campesino Paraguayo — MCP) in 1980. The 
MCP included associations of peasants and landless workers as well 
as the Permanent Commission of Relatives of the Disappeared and 
Murdered, which dealt with victims of repression in the rural areas. 

Although small, the MCP was quite successful in mobilizing the 
rural poor. For example, in July 1985, it brought together more 
than 5,000 landless peasants in Caaguazu, where they established 
the Permanent Assembly of Landless Peasants (Asamblea Per- 
manente de Campesinos sin Tierra — APCT). Despite government 
harassment, the APCT claimed to be the nation's largest indepen- 
dent mass organization with a membership of 10,000 families. Its 
objectives were spelled out in a thirteen-point program advocat- 
ing a radical transformation of society. 

Students 

In recent decades, public education has been tightly controlled 
by the government, and private educational institutions also had 
to conform. Public- sector educational personnel, from the minister 
of education and worship down to the primary- school teachers, had 
to belong to the Colorado Party. The Catholic University, although 
subject to pressure and even invasion by the police, enjoyed a some- 
what more open environment for teaching and research than did 
the National University. 

For most of the Stronato, students at the public and Catholic 
universities were represented by the government- sponsored Univer- 
sity Federation of Paraguay (Federation Universitaria del 
Paraguay — FUP). In June 1985, however, several hundred law stu- 
dents demonstrated publicly in favor of freedom of the press and 
an end to corruption. Following the death of a law student, vio- 
lent confrontations erupted with the police in April 1986. The stu- 
dent movement removed itself from the control of the National 
Committee of the Colorado Party, and the FUP was disbanded. 
In April 1987, a new organization, the Federation of University 
Students of Paraguay (Federation de Estudiantes Universitarios 
del Paraguay — FEUP) was formally launched at a meeting attended 
by 5,000 students. The FEUP participated in the national dialogue 
although the union was not legally recognized. 



190 



Government and Politics 



The Media 

Although there was some improvement in the human rights sit- 
uation in Paraguay in the late 1980s, the same cannot be said 
regarding the media. The Stroessner regime did not hesitate to 
silence newspapers and radio stations that became too indepen- 
dent and critical. The only media that remained critical and were 
allowed to function belonged to the Roman Catholic Church. 

In 1988 there were five progovernment daily newspapers in Asun- 
cion: El Diario de Noticias, Hoy, La Tarde, Ultima Hora, and Patria. 
Ultima Hora demonstrated somewhat more independence from the 
regime than the other four. Weekly newspapers included one pub- 
lished by the Colorado Party, Mayoria, and another, more or less 
independent, Nande, which practiced self-censorship. There was 
one opposition weekly, Sendero, published by the Roman Catholic 
Church. It had a limited circulation and was often confiscated off 
the streets. In addition, Mario Medina, bishop of Benjamin Aceval, 
published a monthly journal, Nuestro Tiempo, that focused on land 
problems, human rights issues, and problems with freedom of the 
press. Because of government harassment, the journal was print- 
ed in Brazil. Consequently, getting it into Paraguay was difficult; 
the maximum circulation of 300 copies was either hand delivered 
or mailed in disguised envelopes. 

In the early 1980s, ABC Color was the largest selling daily 
newspaper, having a circulation of 85,000. The newspaper was 
founded in 1967 by Aldo Zuccolillo — a wealthy businessman and 
confidant of Stroessner and others in his inner circle — and was origi- 
nally supportive of the regime. The paper began to focus on 
polemical issues, however, including corruption among senior 
government officials and the negative aspects of the Treaty of Itaipu 
with Brazil, and included interviews with opposition politicians. 
Its circulation increased, and it became the most important source 
in Paraguay for independent information. In May 1983, ABC Color's 
offices were surrounded by troops, and Zuccolillo was arrested. Fol- 
lowing further harassment, the newspaper was shut down in March 
1984 by order of the minister of interior. Despite resolutions in 
the United States Congress, protests by the United States embassy 
in Asuncion, and protest visits by the Inter- American Press 
Association, as of 1988 ABC Color remained closed. 

In the late 1980s, there were two semi-official television stations 
and fifty- two radio stations, only three of which were independent. 
One of the latter was Radio Caritas of the Roman Catholic Church. 
Until it was closed in January 1987, the most important indepen- 
dent station was Radio Nanduti. The station's popular live phone-in 



191 



Paraguay: A Country Study 



program frequently aired complaints about corruption and the lack 
of democracy. In July 1983, however, Radio Nandutf's director, 
Humberto Rubin, was arrested several times; in April and May 
1986, the station was attacked by Colorado vigilantes. After months 
of jamming and other harassment, Radio Nandutf was finally forced 
off the air. 

Although little free media existed in the late 1980s, there was, 
nevertheless, a certain amount of critical reporting on political and 
social events and themes in the progovernment dailies. Occasion- 
ally reported, for example, were activities of and statements by 
unrecognized political parties, labor organizations, and commu- 
nity organizations; critical statements by the Roman Catholic 
Church and the Inter-American Commission on Human Rights; 
harassment and imprisonment of opposition politicians; and repres- 
sion of peasants. Self-censorship was predominant, but there was 
more reporting on critical topics than might have been anticipated 
under a tightly controlled political system. Most reports did not, 
however, touch directly upon the president except to praise and 
esteem him. 

Foreign Relations 

Since gaining independence, Paraguay's fortunes have been 
largely determined by its relationships with its immediate neigh- 
bors. Like Uruguay to the south, it is a buffer state separating Brazil 
and Argentina — the two largest countries in South America — and, 
like Bolivia to the west, it is landlocked. The circumstance of being 
landlocked has historically led the country alternately into isola- 
tionism and expansionism; its buffer status has underwritten its 
sovereignty. Paraguay's foreign policy has traditionally aimed at 
striking a balance between the influence of its two large neighbors. 

Foreign policy under Stroessner was based on two major prin- 
ciples: nonintervention in the affairs of other countries and no 
relations with countries under Marxist governments. The only 
exception to the second principle was Yugoslavia. Paraguay main- 
tained relations with Taiwan and did not recognize China. It had 
relations with South Africa but not with Angola or Mozambique. 
Paraguay broke diplomatic relations with Cuba in 1959 after the 
Castro government provided support to Paraguayan radicals. It 
terminated relations with Nicaragua in 1980 after the assassina- 
tion in Asuncion of Anastasio Somoza Debayle, the deposed 
Nicaraguan dictator. It was a member of the United Nations (UN), 
the Organization of American States (OAS), and the Latin Ameri- 
can Integration Association, and a signatory of the 1947 Inter- 
American Treaty of Reciprocal Assistance (Rio Treaty). 



192 



National headquarters of the Colorado Party, Asuncion 

Courtesy Richard S. Sacks 

Argentina and Brazil 

Paraguay had traditionally been aligned with Argentina, as the 
port of Buenos Aires provided the only access to external markets, 
thus determining the direction of Paraguayan trade. Paraguay 
depended heavily on Argentina for trade throughout the twentieth 
century, although many Paraguayans chafed at their dependence. 
Even before taking power in 1954, Stroessner criticized Argentine 
hegemony. Soon after becoming president, Stroessner joined with 
sectors in the Colorado Party and the armed forces to explore ways 
to limit the influence of Buenos Aires in Paraguayan affairs. 

Stroessner' s interests coincided with those of Brazil, which desired 
to increase its influence at the expense of Argentina and to estab- 
lish transportation linkages with countries to the west. In the 1950s, 
Brazil funded the construction of new buildings for the National 
University in Asuncion, granted Paraguay free-port privileges on 
the Brazilian coast at Paranagua, and built the Friendship Bridge 
over the Rio Parana, thereby linking Paranagua to Asuncion. The 
signing of the Treaty of Itaipu in April 1973 symbolized that 
Paraguay's relationship with Brazil had become more important 
than its ties with Argentina. 

The Stroessner regime benefited politically and economically 
from its relationship with Brazil, and the diplomatic and moral 



193 



Paraguay: A Country Study 

support given to Stroessner enhanced his prestige. Because of the 
tremendous infusion of money and jobs associated with Itaipu, the 
Paraguayan economy grew very rapidly in the 1970s. Brazilians 
moved in massive numbers into the eastern border region of 
Paraguay, where they helped change the nature of export crops 
to emphasize soybeans and cotton. Observers reported that 60 per- 
cent of Paraguayan economic activities derived from agricul- 
ture, industry, commerce, and services were in the hands of 
Brazilians, working as partners with Paraguayans. Brazilian tourism 
and purchases of contraband and other goods at Puerto Presidente 
Stroessner also brought in substantial revenue. Military equipment 
and training in the 1980s also were provided overwhelmingly by 
Brazil. In addition, Brazilian banks financed a growing share of 
Paraguay's external debt in the 1980s (see Balance of Payments 
and Debt, ch. 3). 

The intimacy of Paraguayan-Brazilian relations generated a 
variety of problems. First, Paraguayan opposition groups charged 
that Brazil had become Paraguay's colonial warder. For example, 
PLRA leader Lamo wrote a book denouncing Brazil's designs on 
Paraguay. The opposition pointed to Paraguay's mounting debt 
problem in the late 1980s and attributed much of it to unneces- 
sary and inefficient Brazilian construction projects. Some US$300 
million of this debt resulted from the controversial Paraguayan Steel 
(Aceros Paraguayos — Acepar) mill that the Brazilians financed and 
built. Acepar was completed after the demand from Itaipu had 
passed, its steel could not be consumed by Paraguay, it imported 
raw materials from Brazil, and its product was too expensive to 
be sold abroad. The Itaipu project itself also represented a source 
of embarrassment for the Stroessner regime. ABC Color, among 
others, pointed out that the Treaty of Itaipu authorized Paraguayan 
sales of excess electricity to Brazil at a price highly advantageous 
to Brazil. Opposition pressure forced a renegotiation of the rate 
in 1986 (see Electricity, ch. 3). 

For its part, Brazil also objected to several actions of the Stroess- 
ner government. In the late 1980s, a number of public and pri- 
vate Paraguayan institutions failed to pay their debts to Brazilian 
creditors. As a result, Itaipu electricity payments were withheld, 
and several Paraguayan accounts were frozen in Brazil. Brazil also 
contended that Paraguayan officials were involved in smuggling 
a wide array of products into or out of Brazil. In 1987 analysts 
estimated that US$1 billion of electronics equipment was smug- 
gled into Brazil, primarily through Puerto Presidente Stroessner. 
In the same year, Brazilian farmers reportedly smuggled over US$1 
billion of agricultural products into Paraguay for reexport, thereby 



194 



Government and Politics 



avoiding payments of Brazilian taxes. Analysts also estimated that 
up to half of all automobiles in Paraguay were stolen from Brazilian 
motorists. Brazilian teamsters threatened to block the Friendship 
Bridge between Brazil and Paraguay to protest the alleged mur- 
ders of truckers whose vehicles were taken to Paraguay. 

Despite Brazil's transition to a civilian government in 1985 and 
the appointment in 1987 of its first nonmilitary ambassador to Asun- 
cion in twenty years, Paraguayan-Brazilian relations remained 
good. Given its substantial investments in Paraguay, Brazil valued 
the political stability offered by the Stroessner regime. Brazilian 
officials refrained from criticizing Stroessner publicly and gener- 
ally avoided specific pressures for a political transition in Paraguay. 
In 1986, however, the president of Brazil met with his counter- 
part from Argentina to discuss increasing commercial and indus- 
trial cooperation in the Rio de la Plata region. The presidents made 
it clear that only democratic countries were eligible to join this new 
regional economic integration program. Thus Bolivia, democratic 
but distant from the Plata, could participate, whereas Paraguay 
was excluded. Although participation in this program could help 
the Paraguayan economy, Stroessner was not prepared to change 
the nature of his regime in order to gain membership. Indeed, 
Stroessner did not hesitate to challenge Brazil if he believed that 
Paraguayan internal stability was at stake. In 1987, for example, 
police attacked several visiting Brazilian congressmen who were 
meeting in Asuncion with National Accord leaders. 

Diplomatic relations between Paraguay and Argentina were 
somewhat strained in the late 1980s. During the 1983 Argentine 
presidential elections, PLRA leader Laino actively campaigned 
among the thousands of Argentine citizens of Paraguayan descent 
for the Radical Civic Union (Union Cfvica Radical — UCR) tick- 
et headed by Raul Alfonsm Foulkes. With the election of Alfon- 
sm, Lamo's party was accorded considerable prestige by the 
Argentine government. Although Alfonsm refrained from public 
criticism of Stroessner, he did send letters of support to opposition 
politicians, including the imprisoned Hermes Rafael Saguier of the 
PLRA. In addition, Alfonsm allowed Lamo to stage anti-Stroessner 
rallies in Argentina. A PLRA demonstration in 1984 in the 
Argentine border town of Formosa resulted in the Paraguayan 
government's decision to close that border crossing for three days. 

In the late 1980s, Paraguay refused to respond to Argentina's 
requests for extradition of former Argentine officers accused of 
human rights abuses during the so-called Dirty War of the late 
1970s. Paraguay also ignored queries regarding the illegal adop- 
tion of children of disappeared Argentines. As a result, the 



195 



Paraguay: A Country Study 

Argentine ambassador was recalled for three months. Argentine 
congressmen also visited opposition politicians in Paraguay to 
demonstrate their support. 

Paraguayan opposition leaders expressed dismay at the selec- 
tion of Carlos Menem as the Peronist candidate for the May 1989 
Argentine presidential elections. During the campaign for his party's 
nomination, Menem met with Stroessner and reminded voters that 
the Paraguayan president had given asylum to Juan Peron after 
the 1955 military coup in Argentina. In late 1988, Menem held 
a wide lead in the polls over his UCR opponent. 

The United States 

Between World War II and the late 1970s, foreign relations 
between Paraguay and the United States were largely conditioned 
by a complementarity of security interests, United States interest 
in trade and investment, and Paraguay's desire for development 
assistance. Stroessner, believing his government to be threatened 
by subversive communist elements from inside and outside 
Paraguay, was one of the staunchest supporters of United States 
security policies in the hemisphere. On security issues that were 
raised in the OAS and the UN, Paraguay voted with the United 
States more consistently than did any other South American 
country. 

In the late 1970s, however, the relationship began to falter as 
a result of human rights abuses and the absence of political reform. 
The United States concern with these issues became public after 
President Jimmy Carter appointed Robert White as ambassador 
to Asuncion and persisted through the administration of Ronald 
Reagan. Ambassador Arthur Davis (1982-85) often invited promi- 
nent members of the National Accord to official embassy functions. 
He also cancelled performances by a United States Army band and 
a parachute team at the May 1984 Independence Day celebration 
as a personal protest against the closing of ABC Color. 

Concern over political developments in Paraguay continued to 
be manifested during the tenure of United States ambassador Clyde 
Taylor (1985-88). Taylor met frequently with members of the 
opposition, protested the continued shutdown of ABC Color, the 
harassment of Radio Nanduti, and the exile of Domingo Lamo. 
Taylor was criticized by Paraguayan officials, including Minister 
of Interior Sabino Montanaro, and other members of the Colorado 
Party. On February 9, 1987, Taylor was teargassed while attend- 
ing a reception in his honor sponsored by Women for Democracy, 
an anti- Stroessner group. 



196 



Government and Politics 



The United States strongly supported the evolution of a more 
open political system with freedom of the press and expression and 
the participation of all democratic parties. In June 1987, Assistant 
Secretary of State for Inter- American Affairs, Elliott Abrams, noted 
that there were some indications of an improving political climate, 
which, if continued, could benefit relations between the two coun- 
tries. He urged the government of Paraguay to institute democracy 
in order to avoid a rift with the United States and unrest within 
Paraguay itself. Abrams also was criticized by members of the 
Colorado Party. The Congress of the United States actively sup- 
ported the Reagan administration's position on human rights and 
Paraguay's transition to democracy. 

Foreign relations between the United States and Paraguay were 
also adversely affected by the involvement of some members of 
Stroessner's government in narcotics trafficking (see Crime, ch. 
5). A 1986 report to the United States House of Representatives 
stated that there was evidence of military collaboration and even 
active participation in the operation of cocaine laboratories. In 1987 
Taylor, a former deputy assistant secretary of state for international 
narcotics matters, stated that the level of narcotics trafficking in 
Paraguay could not have been reached without official protection. 
In its 1988 annual narcotics report, the United States Department 
of State also concluded that Paraguay was "a significant money- 
laundering location for narcotics traffickers due to lax government 
controls." An investigative story by Cox Newspapers in October 
1988 charged that Gustavo Stroessner collected payoffs from all 
narcotics traffickers conducting business in Paraguay. 

In accordance with the Foreign Assistance Act of 1961 , the Rea- 
gan administration certified to Congress in 1988 that the Para- 
guayan government was fully cooperating with United States drug 
enforcement efforts. The administration based this certification, 
however, more on its own national interests than on specific actions 
of the Paraguayan government. Three factors motivated the 
administration to issue the certification. First, the administration 
believed that it needed additional time to test the sincerity of Stroess- 
ner' s professed willingness to cooperate in controlling drugs. In 
1987 the United States provided Paraguay with a US$200,000 grant 
to train and equip an antinarcotics unit. The following year the 
United States Drug Enforcement Administration reopened a sta- 
tion in Asuncion after a seven-year absence. Second, the adminis- 
tration feared that decertification could jeopardize the Peace Corps' 
substantial presence in Paraguay. In 1987 US$2 million was ear- 
marked to support Peace Corps activities in Paraguay. Finally, the 
administration contended that certification enhanced the ability of 



197 



Paraguay: A Country Study 

the United States to encourage democratic reform in Paraguay. 

Economic relations between the United States and Paraguay were 
minimal in the late 1980s. The United States invested only a small 
amount in Paraguayan banking and agriculture and conducted little 
trade (see External Trade, ch. 3). In January 1987, by an execu- 
tive order of President Reagan, Paraguay was suspended from 
receiving benefits through its membership in the Generalized Sys- 
tem of Preferences. Although Paraguay still belonged to the sys- 
tem, it could no longer take advantage of the preferential tariff 
treatment for its exports to the United States. Despite the relatively 
low level of its exports, observers regarded the suspension as 
symbolically important. As of mid- 1988, the suspension remained 
in effect. 

At the end of 1988, both continuity and change marked the 
Paraguayan political system. The government continued to take 
a strong stand against political dissidents, and PLRA leaders were 
periodically detained to prevent them from staging rallies. The PDC 
suspended its planned national convention after the minister of 
interior refused to authorize it. Students belonging to the MDP 
were arrested for putting up the movement's posters. Police arrested 
five former priests from Western Europe, accused them of belonging 
to an extremist organization, and deported them to Argentina. At 
the same time, however, signs of political change appeared. A silent 
protest march sponsored by the Roman Catholic Church attracted 
an estimated 50,000 participants, making it the largest opposition 
event of the Stroessner era. When Chilean voters rejected the bid 
by Augusto Pinochet Ugarte to extend military rule well into the 
1990s, the prospect of a civilian president in Chile by 1990 only 
served to further isolate Stroessner from the democratic trend sweep- 
ing South America. Finally, the seventy- six-year-old general's can- 
cellation of public appearances in September because of health 
problems caused many to speak openly of a post-Stroessner 
Paraguay. 

There is little available literature in English on politics in con- 
temporary Paraguay. The best recent book is Paul H. Lewis's 
Paraguay Under Stroessner, which covers the period up to the late 1970s. 
Somewhat more information is available in chapter or article form. 
The chapter, "Paraguay," in Adrian J. English's Armed Forces of 
Latin America is a good overview of this topic with some political 
background. R. Andrew Nickson's "Tyranny and Longevity: 
Stroessner's Paraguay" is the best recent overview of the political 



198 



Government and Politics 



situation, and Thomas G. Sanders's Prospects for Political Change in 
Paraguay is equally good but slightly dated. More dated is Riordan 
Roett and Amparo Menendez-C anion's "Authoritarian Paraguay: 
The Personalist Tradition." Also very useful are the articles pub- 
lished periodically by John Hoyt Williams in Current History and 
by Williams and J. Eliseo da Rosa in The Latin America and Caribbean 
Contemporary Record. (For further information and complete cita- 
tions, see Bibliography.) 



199 



Chapter 5. National Security 




Francisco Solano Lop* 



IN MID-1988 THE ARMED FORCES continued to act as a 
major source of support for the authoritarian regime of President 
Alfredo Stroessner Mattiauda. Stroessner had used them, along 
with the police and the ruling National Republican Association — 
Colorado Party (Asociacion Nacional Republicana — Partido 
Colorado), as the primary instruments to maintain his regime since 
coming to power in a coup d'etat in 1954. Under the Constitu- 
tion, the president is designated the nation's commander in chief. 
Stroessner, himself a general in the Paraguayan army, had chosen 
to fill this role actively, retaining command authority over the 
defense forces and involving himself personally in day-to-day 
decision making related to them. Stroessner was able to keep the 
military under his control, rather than vice versa, through his cul- 
tivation of ties of personal loyalty, his direction of assignments and 
promotions, and his reliance on a system of checks and balances 
within and among the defense forces, the police, the Colorado Party, 
and elite forces under his own control. Military members had also 
been given a substantial stake in Stroessner' s regime, which granted 
them special privileges and power through salary, benefits, and 
opportunities for patronage and graft. 

Paraguay had a strong military tradition, and the nation took 
great pride in its performance against Argentina in 1811, in the 
1865-70 War of the Triple Alliance, and in the Chaco War of 
1932-35 against Bolivia. The military tradition remained a valued 
one, even though the country had faced little if any external threat 
since the Chaco War. Instead, the armed forces under Stroessner 
were chiefly occupied in preserving internal security and support- 
ing the regime. The military was also charged with guarding 
Paraguay's borders and protecting against insurgency, which had 
been limited to the 1959-64 period and was largely ineffective. In 
addition, the armed forces devoted a large portion of their resources 
to civic action and rural development. In keeping with the limited 
external threat, the military was equipped mainly to meet public 
order and internal security assignments. Reflecting the nation's 
troubled economy and the absence of significant threats, defense 
spending in the 1980s had not kept up with inflation. Most mili- 
tary equipment had thus grown more and more outdated. 

For administrative purposes, the armed forces fell under the pur- 
view of the Ministry of National Defense. Operational command 
of the approximately 17,000-member military was held directly by 



203 



Paraguay: A Country Study 



the president and exercised through the armed forces general staff. 
The army was the largest and most influential of the three serv- 
ices. It was equipped mainly as a light infantry force. Army officers, 
usually retired from active service, held positions in other branches 
of government and as managers of state-run economic, social, and 
political organizations. The navy was a riverine force that included 
a battalion of marines. The small air force flew mainly transport 
planes and helicopters, but also had a small number of counterin- 
surgency aircraft and a paratroop battalion. 

The country enjoyed unprecedented internal security under 
Stroessner, and conditions of public order could generally be charac- 
terized as peaceful. This level of order came about, however, largely 
as a result of the government's willingness to use whatever means 
it deemed necessary to quell disorder and suppress dissent. From 
1954 until April 1987, the government ruled almost continually 
under state-of- siege provisions. These provisions suspended in the 
name of security civil rights guaranteed in the Constitution. The 
government justified the extraordinary security measures as the 
price of peace in a "democracy without communism," even though 
the nation had not faced a credible communist threat since at least 
the mid-1960s. 

The government's harsh internal security measures ensured that 
opposition to the regime remained muted throughout the 1970s 
and early 1980s. A slight relaxation in the government's response 
to domestic dissent, combined with the inspiration of Argentina's 
return to civilian democratic rule in 1984, emboldened some mem- 
bers of the opposition in the mid-1980s. Members of the press, the 
political opposition, and labor groups, as well as students, peasants, 
and representatives of the Roman Catholic Church, began to 
express dissatisfaction with Paraguay's political system and the eco- 
nomic hardship that followed the end of the construction of the 
Itaipu hydroelectric project (see Growth and Structure of the Econ- 
omy, ch. 3). In 1985 and increasingly in 1986, unprecedented 
demonstrations were mounted in Asuncion and elsewhere. Most 
of these were peaceful until they were violendy dispersed by police 
and other security personnel. The lapse of the state of siege in April 
1987 was followed by a short interval of greater official tolerance 
toward dissent. This tolerance ended abruptly in late 1987, however, 
when a faction of the Colorado Party describing itself as militant, 
pro-Stroessner, and combative, took control of the Colorado Party. 
As of late 1988, the government's return to harsh repression had 
not abated. 

Criminal justice was the responsibility of the national govern- 
ment. The national judiciary, headed by the five-member Supreme 



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National Security 



Court of Justice, administered the country's criminal courts. All 
penal and procedural statutes were issued by the central govern- 
ment. Paraguay's police force was also a national force, organized 
under the Ministry of Interior. Police were divided into one force 
that served the capital area and another that served the rest of the 
country in divisions assigned to each of the nation's eighteen other 
departments. Public confidence in the criminal justice system was 
undermined because, although the judiciary was formally a coequal 
branch of government, in practice it was clearly subordinate to the 
executive branch. Moreover, both the judiciary and the police were 
widely viewed as susceptible to political and economic influence. 

The History and Development of the Armed Forces 

The nation's military tradition is rooted in the colonial past, when 
armed groups in what is now Paraguay fought against royal Spanish 
armies and Jesuit-led Indian forces. Elements of these Paraguayan 
armed groups were organized into a force of approximately 3,000 
members that in 181 1 repelled an invasion by Argentine forces seek- 
ing to annex Paraguay. As a result of that victory, Paraguay 
declared its independence (see Struggle with the Portefios, ch. 1). 

The modern army and the navy owe their origins to forces built 
up under Jose Gaspar Rodriguez de Francia, who ruled as a dic- 
tator from 1814 to 1840 (see El Supremo Dictador, ch. 1). After 
heavily purging existing forces to ensure their loyalty to him, Fran- 
cia imposed strict discipline within the ranks. Under his direction, 
army and naval strength was increased to deter Argentina from 
further attacks on Paraguay and to act as the infrastructure for his 
own autocratic rule. Francia instituted a program of conscription 
to meet the military's manpower requirements. He also placed land- 
holdings confiscated from his opponents under the control of the 
army, which until the late 1980s partially fed and supported itself 
by either working the land directly or leasing it out. 

The army and navy were further improved by President Carlos 
Antonio Lopez, who ruled from 1841 to 1862. Like Francia, Lopez 
used the military both to maintain his rule and to deter invasion 
by the nation's larger neighbors (see Carlos Antonio Lopez, ch. 
1). Lopez was succeeded by his son, Francisco Solano Lopez, an 
army general who had studied military matters in Europe. The 
younger Lopez completely reorganized the 7,000-member army 
he had inherited and began a program of rapid military expan- 
sion. By 1864 the army numbered 30,000 and comprised 30 infantry 
battalions, 23 cavalry regiments, and 4 artillery regiments. The 
navy was also strengthened, acquiring the world's first steamship 
built intentionally as a warship. 



205 



Paraguay: A Country Study 

The buildup reflected Lopez's aspirations to increase his influence 
in the region. Attempts to do so led to the 1865-70 War of the 
Triple Alliance, in which Paraguay faced Argentina, Brazil, and 
Uruguay in a bloody confrontation that eventually drastically 
reduced the national population (see The War of the Triple Alli- 
ance, ch. 1). Paraguay began the war with an extensive military 
establishment, but its opponents, especially Brazil, had far greater 
economic and manpower resources. Paraguay's military was able 
to make up some of the imbalance through its fierce fighting and 
its determination to accept total destruction rather than surrender. 
As the war progressed, however, even Lopez's harsh methods of 
compelling devotion to battle proved insufficient, and the nation 
was reduced to conscripting boys down to the age of twelve, but 
boys as young as ten could volunteer. By the war's end, the army 
was made up of a few hundred men — most of whom were wounded, 
old, or very young. Brazil's soldiers were stationed in Paraguay 
as an army of occupation until 1876. 

The next few decades were spent in rebuilding the devastated 
nation, so there was little money for the military. Although the 
army remained small, it emerged as a center of political power and 
a primary source of national political leaders. General Bernardino 
Caballero became a national leader, governing first directly as presi- 
dent and later behind the scenes as the head of the armed forces 
(see The First Colorado Era, ch. 1). He also founded the National 
Republican Association — which adopted red as its symbolic color 
and came to be known as the Colorado Party. 

The bitter competition between the Colorados and their Liberal 
Party (Partido Liberal — PL) opponents extended into the armed 
forces. The late 1800s saw the beginning of what came to be a pat- 
tern of army intervention in national politics, rebellions by army 
factions, and assumption of power by army leaders. The military 
saw action both in putting down armed revolts and in mounting 
them. Elements of the army fought on both sides when exiled PL 
members launched an invasion of Paraguay with the tacit support 
of Argentina in 1904, eventually deposing the Colorado govern- 
ment. The military again divided into warring groups between 1922 
and 1924 when civil war broke out among PL factions. By that 
time, the army had become the chief source of political power and 
the most frequent instigator of political change. 

Growing tension with Bolivia over a long-disputed boundary in 
the Chaco fueled a secret program of rearmament in the late 1920s 
(see fig. 3). A major clash between the two countries occurred in 
1928; both nations then began to prepare for war, building up their 
military capability and stationing growing numbers of troops in 



206 



National Security 



the Chaco. After war broke out in July 1932, Paraguay rapidly 
mobilized and brought troop strength up to 24,000. The army suc- 
ceeded several times in outflanking the more numerous Bolivian 
forces, cutting their supply lines and access to water. Paraguayan 
forces also benefited from the fact that Bolivian troops — mostly 
Indians from the Andes Mountains — were not used to the climate 
and low altitude of the Chaco. The Chaco War was the bloodiest 
war in the Western Hemisphere during the twentieth century. By 
the time a truce was signed in 1935, about 36,000 Paraguayans 
and an estimated 44,000 Bolivians were dead. The nation was also 
left economically devastated (see The Chaco War and the Febru- 
ary Revolution, ch. 1). 

In keeping with the terms of the armistice with Bolivia, Paraguay 
reduced its army to under 5,000 soon after the war's end. The mili- 
tary had captured a large quantity of light arms, mortars, and 
artillery in the Chaco War. These made up a substantial portion 
of the army inventory for some fifteen years, because little new 
equipment was acquired in the 1940s. In the early 1950s, however, 
the military establishment expanded, and the army beefed up its 
artillery, infantry, and engineer forces. During the same period, 
Argentina and Brazil began to compete for military influence in 
Paraguay, each presenting the nation with its excess second-hand 
equipment, most of which had been manufactured in the United 
States. A small quantity of aircraft and other items were also turned 
over by the United States, so that by the 1950s most of the nation's 
military inventory was of United States manufacture. 

Although the years following the Chaco War had been a period 
of stagnation for the armed forces in the purely military sphere, 
the same could not be said of the political sphere. Paraguayans had 
viewed the war as a defense of their homeland, and military ser- 
vice was seen as a matter of great pride and prestige. As had been 
the case after the War of the Triple Alliance, military figures who 
had made their reputation in the war emerged very soon as the 
nation's political leaders. The first of these leaders was the popu- 
lar war hero Colonel Rafael Franco, who came to power in a 1936 
coup against a PL government. He was supported by veterans dis- 
satisfied with the settlement with Bolivia and with their remunera- 
tion for service, as well as by students, intellectuals, and members 
of organized labor seeking various reforms. Franco's supporters 
formed the Febrerista Revolutionary Party (Partido Revolucionario 
Febrerista — PRF), more commonly known as Febreristas, named 
after the month in which the coup had occurred. Although Franco 
was deposed in a military revolt a year later, the Febreristas con- 
tinued to be an active source of government opposition in the next 



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Paraguay: A Country Study 

two decades. Six of the eleven regimes during the 1935-54 period 
were headed by army officers, ending with the regime of General 
Stroessner. In addition, all of the five civilian presidents came to 
power with army backing and/or were deposed under army pres- 
sure (see Mormigo and World War II, ch. 1). 

The defense forces continued to be divided internally along 
political lines. Tension among factions that aligned with different 
parties sometimes resulted in open conflict. For instance, army units 
rose in revolt during World War II, when Paraguay, like most South 
American countries, declared war on the Axis powers. The most 
serious conflict came in 1947, however, after President Higinio 
Mormigo, an army general who had ruled since 1940 — primarily 
with the support of the army rather than a particular party — 
appeared to give increasing power to the Colorado Party. In reac- 
tion, civil war broke out after the air force and army broke into 
factions, most of the military supporting a coalition of Febrerista, 
PL, and communist elements. The rebel forces, joined by virtually 
the entire navy, were put down only with great difficulty by the 
government. Mormigo' s cause was helped significandy by the fact 
that Stroessner — then a lieutenant colonel — committed his artillery 
regiment to the government side. 

Because up to 80 percent of the military had joined the rebel 
side during the civil war, the government initiated a widespread 
purge of the armed forces, and the marines were disbanded entirely 
until the 1950s. As a result, the defense forces became almost com- 
pletely an organization of the Colorado Party. Stroessner' s own 
impressive performance in the war was responsible for his emer- 
gence as one of the nation's leading military figures in the late 1940s. 
Stroessner and fellow Colorado Party members viewed with par- 
ticular bitterness the communist role in the civil war. After that 
time, the suggestion of a potential communist threat was sufficient 
to promote an immediate negative reaction by the government. 

Transforming the armed forces into an organization composed 
almost exclusively of Colorado personnel did not rid them of fac- 
tionalism. Warring elements within the party took part in coup 
attempts in 1948 and 1949, and Stroessner was a main player in 
each attempt. At one point, he was forced to flee to Brazil to escape 
reprisal for his role in an unsuccessful revolt. He was back in the 
country within a few months, however, after taking part in a suc- 
cessful coup in 1949. As a reward for his role, he was given a se- 
ries of rapid promotions, rising to commander in chief of the armed 
forces in 1951. Stroessner himself came to power as president in 
an army-backed coup in 1954 (see The 1954 Coup; Consolidation 
of the Stroessner Regime, ch. 1). 



208 



The Virgin of Asuncion 
at the National Pantheon of Heroes, Asuncion. The Virgin 
holds the honorary rank of marshal of the Paraguayan Army. 

Courtesy Tim Merrill 

Stroessner inherited a military establishment still ridden by fac- 
tionalism, as well as an economy damaged by civil war and politi- 
cal instability. After forces loyal to him forestalled a planned coup 
in 1955, he followed up by purging dissident elements the next year. 
During the late 1950s, opposition to Stroessner flared over austerity 



209 



Paraguay: A Country Study 



measures imposed by his government, and strikes and student 
demonstrations followed. The opposition drew inspiration and some 
funds from foreign sources. A government crackdown in 1958 and 
1959 included another purge of the armed forces. After that time, 
virtually all members of the officer corps were either associated with 
a pro-Stroessner wing of the Colorado Party or personally loyal 
to or dependent upon Stroessner. 

Opposition to Stroessner' s rule was purely internal until 1959, 
when guerrillas that were allied with elements of Febrerista, PL, 
and communist opponents mounted sporadic and largely ineffec- 
tive raids from bases in Argentina and Brazil. Never of sufficient 
size to threaten the government or seriously upset public order, 
these insurgencies were easily quelled by the military, which relied 
on intelligence provided by Colorado Party members throughout 
the country. Using the armed forces and the police, the govern- 
ment also cracked down on internal opposition, branding many 
of its opponents as communist. Guerrilla activity died out by 1964 
as a result of harsh government reprisals, lack of support within 
Paraguay, and moves by Argentina and Brazil to close guerrilla 
bases in their countries. 

By late 1988, in the absence of any external or insurgent threat, 
the armed forces continued to help enforce the government's tight 
control over the domestic political scene. The military leadership 
appeared to accept that national economic conditions dictated that 
the government's rhetorical support for the defense forces could 
not be matched by sufficient material support to replace or update 
the aging armed forces inventory. Although the military appeared 
to remain completely loyal to Stroessner, his government, and the 
Colorado Party, its personnel were not immune to factionalism 
within the Colorado Party. This factionalism manifested itself in 
political violence in the mid-1980s (see The Twin Pillars of the 
Stroessner Regime; Political Developments Since 1986, ch. 4). As 
of late 1988, however, political factionalism within the armed forces 
did not appear to have seriously affected operations of any of the 
three services. 

The Armed Forces in the National Life 

The ideal of an apolitical military force that is shielded from 
domestic political debates, kept out of domestic decision making, 
and kept under firm civilian control has not been relevant to the 
Paraguayan experience. The nation's military, particularly the army 
as the dominant service, traditionally has been the most powerful 
institution in the nation, exercising an heroic military role in times 
of external threat and exerting a strong political and economic 



210 



National Security 



presence in peacetime. Many military officers have aspired to 
national political leadership, and several have achieved it. 

In turn, political leaders — whether in power or in the 
opposition — historically have sought to exert their personal influence 
over the internal operations of the armed forces and to use the mili- 
tary as an instrument of their own regimes. Such efforts have fallen 
squarely within the Paraguayan cultural tradition, which stresses 
the importance of personal ties and personal loyalty over abstract 
ideology or institutionalism. In such a small country, military, eco- 
nomic, social, and political elites frequently shared ties of kinship 
or personal affinity. Therefore, institutional barriers have not been 
strong enough to prevent the intrusion of political or other con- 
siderations into purely military matters. On one level, the lack of 
separation between political and military affairs has resulted in 
decisions on such matters as promotions and assignments being 
based on considerations other than merit or satisfaction of qualifying 
factors. 

On another level, this lack of separation has had grave conse- 
quences for national stability. It is true that under the strong and 
efficient management of Francia, the Lopezes, and Stroessner, the 
military remained internally unified and acted as the main instru- 
ment of authoritarian rule. For most of the rest of the nation's his- 
tory, however, political turmoil in the national leadership was 
reflected in divisiveness within the armed forces. The resulting fac- 
tionalism frequently erupted into violence that itself threatened pub- 
lic order and political stability. Supporters of the Stroessner regime 
have justified his authoritarian rule in part by noting the correla- 
tion between periods of national stability and the presence of strong 
rulers able to exert control over the military and the political process. 

In late 1988, the military's most significant role in the national 
life was its apparently unified backing for the Stroessner regime. 
Such backing resulted from Stroessner' s efforts first to achieve and 
then to maintain military support. By 1959 he had completely 
purged the officer corps of all persons who were not members of 
the pro-Stroessner wing of the Colorado Party. Thereafter, candi- 
dates for service were screened for loyalty to the party. Faction- 
alism within the Colorado Party persisted, however, and also 
surfaced in the 1980s in the officer corps. In 1986, for instance, 
the head of the army's First Cavalry Division was reported to have 
been replaced on political grounds by an officer closely identified 
with the "traditionalist" faction of the Colorado Party — the fac- 
tion also favored by the army's powerful First Corps commander, 
Major General Andres Rodriguez. In late 1988, it was unclear how 
deeply the party factionalism had affected officer morale or how 



211 



Paraguay: A Country Study 

this factionalism had affected relations between the military and 
the Colorado Party leadership, which was taken over by the "mili- 
tant" faction in late 1987. 

Despite its influence in national political affairs, the Colorado 
Party did not control the military, and the armed forces had no 
political officers serving alongside military officers. Instead, party 
loyalty served as a litmus test of trustworthiness and loyalty to the 
regime. The Colorado Party, which was highly organized, block 
by block in towns and cities, also served as a channel of informa- 
tion on military matters and the actions of military personnel. In 
addition, the party was a potential check on the power of the armed 
forces. 

Stroessner played an active role in overseeing military affairs. 
The president chaired the promotion boards held twice a year and 
oversaw all important assignments. He devoted one day each week 
to military matters and attended numerous ceremonies and parades. 
He took time to cultivate junior officers, especially those in direct 
command of troops, and made sure that conditions of service were 
good enough to keep the military content. In addition to relying 
on personal loyalty and oversight, Stroessner relied on the struc- 
ture of the military establishment to maintain control over the armed 
forces. He held command personally through the armed forces 
general staff, dividing command and support duties between the 
general staff and the Ministry of National Defense. Stroessner also 
maintained his own well-armed and well- trained security force, the 
Presidential Escort Regiment. 

Missions 

The nation faced no foreseeable external threat in late 1988 and 
took care to maintain workable diplomatic relations with its large 
neighbors, Brazil and Argentina. Relations with Bolivia, which had 
sometimes been slightly strained over issues related to the shared 
border in the Chaco, had not been viewed as a serious threat to 
national security since the Chaco War. The threat of insurgent 
activity appeared low, and no incidents of guerrilla activity had 
been reported since a limited number of minor incursions took place 
in the early 1970s. Consequently, the external defense mission of 
the armed forces was essentially limited to monitoring the nation's 
borders. 

The internal security mission was far more significant. Military 
units frequently were called out to control demonstrations or han- 
dle other manifestations of unrest. The military also maintained 
checkpoints in the sparsely populated Chaco region as part of the 
government's administration of the area. 



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All three branches of the armed forces were involved in civic- 
action projects. The army's engineer battalions were responsible 
for road construction and the maintenance of transportation routes. 
The engineers also built schools and public buildings for rural com- 
munities, did excavation work, constructed water tanks, and 
provided bricks and tiles for local building projects. The navy per- 
formed ship repair for the merchant fleet, and naval vessels trans- 
ported goods to needy communities at no cost. The air force 
provided transportation services and helped build schools and land- 
ing fields in isolated areas. Medical personnel from all three ser- 
vices operated rural clinics and offered free emergency medical treat- 
ment. The army's veterinary unit was the nation's only public 
veterinary service. All three services were active in disaster relief 
efforts. 

Manpower 

In mid- 1988 the total strength of the armed forces was estimated 
at 19,500 persons. This number represented a ratio of approxi- 
mately 4.4 military personnel for every 1,000 Paraguayans, down 
from more than 9 per 1 ,000 in the late 1960s. This level was slightly 
below the average for Latin American countries, a falloff since the 
early 1970s, when Paraguay's ratio was more than twice the aver- 
age. An estimated 55 percent of armed forces personnel were con- 
scripts. 

Conscription had a long history in the nation. During the 
nineteenth century, the practice of "press-ganging" Indians and 
peasants into the military was common in Paraguay. The current 
system of conscription, however, was rooted in 1908 when a for- 
mal program of compulsory universal military service was instituted 
for males. In mid- 1988 the system of conscription had its legal foun- 
dation in Article 125 of the Constitution, which states: "Every 
Paraguayan citizen is obliged to bear arms in defense of the nation 
and this Constitution. Military service is compulsory for male 
citizens, and those who have completed military service shall remain 
in the reserves. Women shall not render military service except 
in case of necessity during an international war, and not as com- 
batants." In accordance with Article 125, women were not sub- 
ject to the draft in the 1980s, and very few served in the armed 
forces. 

Males were liable for two years of service upon reaching eigh- 
teen years of age. College students fulfilled their obligations by 
spending three summers in military training, which led to reserve 
officer commissions. Those males exempted from service were 
required to pay a military tax. Conscription was strictly enforced, 



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Paraguay: A Country Study 

but the number judged physically fit to serve was generally great- 
er than actual manpower requirements, and only about half of those 
eligible were actually called to serve. The number of men required 
annually to replace those completing service did not adversely affect 
the labor force. 

Conscripts came from all segments of Paraguay's population, 
which was relatively homogeneous in ethnic, social, and cultural 
makeup. Entry was greatly facilitated by personal or family ties 
to the Colorado Party. Military service generally was viewed as 
a patriotic duty, and service for conscripts was not particularly 
rigorous. In fact, for many conscripts, fulfilling their military ob- 
ligation represented an opportunity to acquire skills valuable in 
finding later employment, including training in mechanics, car- 
pentry, and all types of construction. Many conscripts learned to 
read and write during their period of service, and most learned 
to drive. 

After meeting their service obligations, conscripts entered an 
organized reserve, serving nine years. They were then liable for 
ten years of service in the National Guard, followed by service in 
the Territorial Guard until the age of forty-five. Officers, noncom- 
missioned officers (NCOs), and enlisted personnel also incurred 
reserve obligations after leaving service. In practice, the National 
Guard and the Territorial Guard seemed to exist primarily as paper 
organizations in 1988. 

Entry into the officer corps was highly competitive. In practice, 
successful candidates had family or personal connections with the 
Colorado Party. Officer candidates came both from the Francisco 
Lopez Military College in Asuncion and from the reserve officer- 
training program for college students. Conditions of military service 
were very good, especially for senior officers. Salaries, when com- 
bined with allowances and medical and pension benefits, compared 
favorably with those of the civilian population. Military personnel 
also enjoyed special privileges, including access to private military 
stores and clubs. Members of the armed forces were exempt from 
car-licensing fees. Officers also had access to favorable business 
and real estate loans. 

Senior officers lived particularly well. The nation, like most Latin 
American countries, had a strong tradition of patron-client rela- 
tions, and senior officers were especially well placed to aid friends, 
relatives, and associates. They influenced decisions related to the 
allocation of public and private employment, the choice of politi- 
cal appointees, the award of public and private business contracts, 
and the outcome of judicial and legal decisions. Retired officers 
provided a pool from which the executive filled management 



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positions in government and in public-sector enterprises. A small 
number of very senior officers had sufficient influence to render 
their actions virtually immune to investigation by law enforcement 
officials or to scrutiny by the domestic press. 

Paraguay had one of the largest officers corps in Latin America. 
Officers in command of many of the most influential positions were 
members of the "old guard," who had supported Stroessner in 
his rise to power and had held command ever since. For a number 
of years, these long-serving generals had blocked promotions for 
middle-ranking officers, but resentment over this issue did not 
appear to be a serious problem during the 1980s. 

The rank structure of the armed forces generally conformed to 
that used in the United States, except that Paraguay had two ranks 
equivalent to the United States army and air force first lieutenant 
and navy ensign and did not employ all of the ranks found in the 
United States military. The army had ten officer ranks ranging 
from second lieutenant to general. The eight air force officer ranks 
were identical to those of the army in level from second lieutenant 
to brigadier general, but did not include higher general officer ranks. 
Army and air force enlisted personnel had nine grades ranging in 
level from private first class to sergeant major, but naval enlistees 
had seven grades from the equivalent of seaman to master chief 
petty officer. The navy had nine officer ranks from ensign to vice 
admiral (see fig. 8). 

Rank insignia for officers of the army and air force were indi- 
cated by a series of five-pointed stars on shoulder boards. Insignia 
for general, major general, and brigadier general consisted of four, 
three, and two gold stars, respectively, surmounted at the outer 
end by an embroidered wreath. Field- grade officers wore gold stars, 
and company-grade officers wore silver stars on shoulder boards. 
For parades, full dress, and special occasions, the shoulder boards 
were exchanged for gilt epaulettes. Naval officer ranks were indi- 
cated by gold-colored bands on the lower sleeve of the shirt. Army 
enlisted personnel wore yellow stripes and/or yellow bars on a red 
background; navy enlisted personnel wore black stripes on white 
background; and air force enlisted personnel wore light blue stripes 
on a blue background (see fig. 9). 

The armed forces had both summer and winter uniforms. The 
three services had full dress, dress, and service uniforms for officers 
and parade, garrison, service, and field uniforms for enlisted 
personnel. The army winter service uniform was dark green, the 
navy's dark blue, and the air force's light blue. Navy officers wore 
all-white summer dress uniforms; army and air force officers wore 
a white shirt with summer dress uniforms for special occasions. 



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Paraguay: A Country Study 

Defense Spending 

According to the latest available government figures, the defense 
budget for 1985 was 13.9 billion guarames (for the value of the 
guaram — see Glossary). That figure represented approximately 10.1 
percent of the total expenditures of the central government, down 
from the 13- to 14-percent levels sustained in the early 1970s. When 
measured in current guarames, military spending increased more 
than fivefold during the 1972-82 period. The most rapid growth 
occurred in the 1979-81 period, when revenues from the Itaipu 
project were at their highest (see Fiscal Policy, ch. 3). When fac- 
toring in inflation during the ten-year period, growth was a more 
modest, but still respectable, 80 percent. The sharp dropoff in 
revenues from Itaipu was reflected in defense expenditures after 
1982; when measured in current guarames, military spending fell 
by 10 percent in 1983, thereafter rising relatively sharply. These 
increases were insufficient to match high levels of inflation during 
the period, however. When measured in constant 1980 guarames, 
defense spending fell almost 30 percent during the 1982-85 period. 

When compared with other Latin American countries, the por- 
tion of the national budget devoted to defense was about average. 
The military's percentage of the gross national product (GNP — 
see Glossary) was about 1 percent in 1985, a low percentage for 
Latin American nations. The level of military expenditures per sol- 
dier was among the lowest in the hemisphere. 

A breakdown of the defense budget was not publicly available 
in late 1988, but the army, as the largest service, was known to 
account for the biggest portion. A large part of army spending went 
to fund civic-action projects. It must therefore be assumed that the 
purely military operations of the army, as well as those of the navy 
and air force, were affected adversely by budget constraints dur- 
ing the mid-1980s. Any modernization of the military's relatively 
obsolete inventory would require a significant increase in defense 
spending. 

The domestic defense industry was very limited in scope, and 
the nation imported almost all of its military equipment. The Direc- 
torate of Military Industries, an agency subordinate to the Minis- 
try of National Defense, maintained a complex in Asuncion that 
produced explosives and repaired and maintained military vehi- 
cles. Under the auspices of the army quartermaster, such items 
as field kitchens and uniforms were manufactured locally. The navy 
also maintained repair workshops and a naval shipyard. 

The army, which had owned large tracts of land since the 1800s, 
ran a number of ranches and farms. The produce from these 



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operations helped to supply the military's food requirements. In 
conjunction with these operations, the army also operated a slaugh- 
terhouse and a meat-packing concern. 

Armed Forces Organization, Training, and Equipment 

Article 180 of the Constitution names the president as commander 
in chief of the armed forces and provides that actual command may 
be delegated to a general officer. As of late 1988, however, Presi- 
dent Stroessner had not exercised this option, but rather had 
retained direct command over the armed forces since 1954. 

The president was assisted by the minister of national defense, 
who was by tradition an active-duty or retired army general officer. 
The minister of national defense was not in the direct chain of com- 
mand, and the ministry's duties were limited to administrative mat- 
ters, including finance, military justice, and inspection (see fig. 10). 
The ministry also had responsibility for defense industries, civil 
aviation, and the National War College. 

The president exercised command through the armed forces 
general staff, the chief of which was always an army general officer. 
The general staff office had sections that handled and coordinated 
matters concerning the army, the navy, and the air force. 

The Presidential Escort Regiment also came under the direct 
command of the president. Personnel assigned to this elite unit num- 
bered some 1,500 in 1988, all of whom were screened for personal 
loyalty to the president. The unit's headquarters and assets were 
located in the capital. Administratively part of the army, the regi- 
ment was primarily an infantry element, but was also equipped 
with a small motorized police unit. It was assigned to protect pub- 
lic officials, including the president. 

Below the chief of the armed forces general staff were the com- 
manders of the army, navy, and air force. These three command- 
ed all tactical and support units of their respective service. Each 
service had its own staff made up of the usual sections: personnel, 
intelligence, operations, and logistics. 

The nation was divided geographically into six military regions. 
The first military region had its headquarters at Asuncion and 
covered the Central, Cordillera, and Paraguan departments 
(see fig. 1). Within it were located the headquarters of all three 
services, the Presidential Escort Regiment, and most training 
establishments and combat support units. The bulk of naval and 
air force assets were also located there, as were historically power- 
ful cavalry and infantry divisions and artillery battalions. The 
second military region, headquartered at Villarrica, comprised 
the departments of Guaira, Caazapa, and Itapua. The third, 



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Paraguay: A Country Study 




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Paraguay: A Country Study 

headquartered at San Juan Bautista, covered the Neembucu and 
Misiones departments. The fourth military region included the 
Amambay, San Pedro, and Concepcion departments and was head- 
quartered at Concepcion. The fifth had its headquarters at Puerto 
Presidente Stroessner and covered the Caaguazu, Alto Parana, and 
Canendiyu departments. The sixth military region, headquartered 
at Mariscal Estigarribia, encompassed the departments of Presidente 
Hayes, Boqueron, Nueva Asuncion, Chaco, and Alto Paraguay. 

The armed forces had an extensive training program for both 
officers and NCOs. The senior school for officers of all three 
branches was the National War College, which was run by the 
Ministry of National Defense. Established in 1968, it offered courses 
designed to prepare officers for command of larger units. The cur- 
ricula also included the study of political, social, economic, and 
military problems of national importance. Located in Asuncion, 
the National War College also admitted senior civil servants. 

Two army-run establishments also trained officers from all three 
branches. The first was the Command and Staff School at Asun- 
cion. Long-held plans to establish a separate naval command and 
staff school continued to be frustrated by financial constraints as 
of 1988. The army also ran the Francisco Lopez Military College, 
the nation's triservice military academy. The academy offered a 
four-year program of military studies and graduated commissioned 
officers. Entrance to the academy was by examination and, because 
of the opportunities available to military officers, competition for 
acceptance was keen. Many cadets attended a four- year military 
preparatory school, the Liceo Militar, before matriculating to the 
academy. 

Reserve officers of all three services were trained at the army's 
Armed Forces Officer Training School. The army also ran the Mili- 
tary Instruction Center for Reserve Officer Training, where mili- 
tary personnel from all three branches, as well as civilian officials, 
received instruction in internal security and public-order issues. 

Because most of the lower ranks were filled by two-year con- 
scripts, the necessity for a highly trained cadre of career NCOs 
was well recognized. Most NCOs were trained primarily in their 
respective service, although specialists in a few fields, including 
medicine, studied at triservice schools. 

Conscripts, who were trained in their respective service, received 
much of their basic instruction in Guaranf, the language of the 
indigenous Guaranf Indians (see Indians, ch. 2). About 95 per- 
cent of the nation's population was of mixed Guaranf and Span- 
ish descent, and an estimated 90 percent of the population spoke 
Guaranf. The military's use of the language was believed to have 



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strategic value because during the Chaco War, the Bolivian mili- 
tary could not understand messages sent in Guaram. 

Since the mid-1950s, the armed forces establishment has been 
most strongly influenced by Brazil and Argentina, both of which 
maintained military missions in the nation and supplied most of 
the country's military equipment. The United States also main- 
tained a military attache in Asuncion, but United States military 
influence was limited. During the 1980s, United States military 
assistance was confined to grants under the International Military 
Education and Training program, under which Paraguayan officers 
studied in various United States military schools. Paraguayan mili- 
tary officers also regularly attended the Inter-American Defense 
College in Washington, D.C. During the 1980s, Paraguay pur- 
chased a small quantity of military equipment from the United 
States under the Foreign Military Sales program. This materiel 
consisted principally of communications equipment and spare parts 
intended to be used for disaster relief, search and rescue, and the 
interdiction of narcotics traffic. 

Paraguay joined the Inter- American Defense Board in 1942, 
which maintained a headquarters and staff in Washington, D.C, 
and acted as a military advisory group to the Organization of Ameri- 
can States, of which Paraguay was also a member. The nation also 
joined with the United States and twenty other Latin American 
nations in 1945 to sign the Act of Chapultepec, in which each agreed 
to consult on any aggression against a cosignator. In 1948 Paraguay 
became a signatory to the Inter- American Treaty of Reciprocal 
Assistance (Rio Treaty), in which the United States and other Latin 
American and Caribbean countries committed themselves to work 
toward the peaceful settlement of disputes and collective self-defense 
in the Americas. Paraguay was also a signatory to the 1967 Treaty 
for the Prohibition of Nuclear Weapons in Latin America (Tlatelol- 
co Treaty). In 1970 it signed the Treaty on the Non-Proliferation 
of Nuclear Weapons and in 1975 accepted the Biological Weapons 
Convention, which prohibits the development, production, or stock- 
piling of such weapons. 

The Army 

The Paraguayan army has existed since independence in 1811, 
when it consisted of two infantry battalions backed up by a militia. 
It was built up under Francia to include cavalry and artillery ele- 
ments and was also backed by a reserve force. The army continued 
to occupy an important position under the presidencies of both Lo- 
pezes, who devoted considerable resources to training, organiza- 
tion, and weaponry. During the 1860s, under the younger Lopez, 



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Paraguay: A Country Study 

the army grew to be the largest in Latin America, maintaining fixed 
artillery positions around Asuncion and in other fortresses in the 
country. In 1864 during the lead-up to the War of the Triple Alli- 
ance, the army was large enough to invade Argentina and Brazil, 
one invasion force numbering as high as 25,000. Eventually, a force 
estimated at 50,000 was mobilized during the war — far more than 
the nation was able to train or arm adequately. The army was over- 
whelmed by the larger and better equipped armies of its opponents, 
which by the war's end in 1870 had reduced the Paraguayan army 
to a few remnants. 

The army was reestablished after the Brazilian occupation ended 
in 1876, but until the turn of the century it consisted mainly of 
small units assigned to defend the frontiers or to act as ceremonial 
forces in the capital. Less a professional institution than a collec- 
tion of forcibly conscripted troops, the army during the late 
1800s came under the shifting commands of officers allied with 
whatever government was currently in power. 

Efforts to improve matters met with uneven results. Most of 
the new equipment acquired during the 1895-1904 period was 
lost in 1904 during the Liberal revolt (see The First Colorado 
Era, ch. 1). The Liberals were backed by a well-equipped 
armed force, the personnel and equipment of which were then 
incorporated into a 2, 000- strong army reorganized by the new 
government. The army again underwent reorganization after the 
1922 civil war. It grew only slightly until the late 1920s, when 
tensions with Bolivia prompted a mobilization, and new battal- 
ions were formed. Approximately 140,000 men saw service 
during the three-year Chaco War, after which the army was reduced 
dramatically to little more than its prewar level. 

The factional split of the army during the 1947 civil war was 
followed by a large turnover in personnel. After operations were 
''regularized," the army was expanded. The greatest buildup came 
in the engineer arm, which began to be used extensively in civic- 
action work. A cavalry division was also organized. 

After Stroessner became president in 1954, he enlarged the army 
again, the most important new element being the Presidential 
Escort Battalion (later expanded to a regiment). The army inven- 
tory grew more slowly. A small quantity of light and medium tanks, 
armored personnel carriers, and armored cars were acquired 
during the 1960s and 1970s, mostly from the United States and 
Brazil. These acquisitions barely kept pace with deletions of obso- 
lete and broken-down equipment, however. 

In 1982 the government announced a new army tactical organi- 
zation that incorporated existing units into three corps. At the same 



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time, two new infantry divisions were formed. 

As of late 1988, army strength stood at 12,500, including mem- 
bers of the Presidential Escort Regiment; about 8,100 army per- 
sonnel were conscripts (see table 9, Appendix). Army combat arms 
included infantry and cavalry divisions and artillery and engineer 
battalions. Logistics services branches included signals, transport, 
administration, war materiel, medical, and veterinary elements that 
were dispatched in support of combat units. 

The army's main tactical units included eight infantry divisions 
and one cavalry division (see table 10, Appendix). At full strength, 
the infantry divisions were each designed to comprise a headquar- 
ters, three infantry regiments, and a logistics support battalion that 
included transport and medical units. In peacetime, however, the 
divisions were actually made up of a single, sometimes "skeleton- 
ized" infantry regiment. The cavalry division included mechanized 
elements as well as men on horseback. 

The eight infantry divisions and the cavalry division were 
organized tactically into three army corps. The First Corps was 
headquartered at Campo Grande near Asuncion and included the 
First Cavalry Division, which was located at Nu Guazu and com- 
prised four cavalry regiments. The First Corps also contained the 
First Infantry Division and the Third Infantry Division, headquar- 
tered respectively at Asuncion and San Juan Bautista. The Second 
Corps contained the Second, Fourth, and Fifth Infantry Divisions. 
The Second Infantry Division, along with the Second Corps head- 
quarters, was located at Villarrica. The Fourth Infantry Division 
was headquartered at Concepcion, the Fifth at Curuguaty. The 
Third Corps also had three infantry divisions. The Sixth Infantry 
Division and corps headquarters were located at Mariscal Estigar- 
ribia in the Chaco. The Seventh and Eighth Infantry Divisions were 
headquartered at Fortm Teniente Primero Stroessner and Mayor 
Pablo Lagarenza, respectively. 

Three other major elements also rounded out this tactical or- 
ganization. The first was the Combat Support Command, which 
comprised an artillery garrison consisting of three artillery battal- 
ions, an engineer command composed of six engineer battalions, 
and a communications command made up of a signals and trans- 
port battalion. The artillery battalions were garrisoned at Paraguari 
and were attached to the infantry divisions on an ad hoc basis. The 
engineer battalions were dispatched as needed throughout the coun- 
try and assigned to military and civilian construction projects as 
well as other civic-action tasks. The second major support ele- 
ment was the Logistics Support Command, which encompassed 
a variety of service elements, including quartermaster, medical, 



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Paraguay: A Country Study 

veterinary, and transport services. This command also oversaw the 
army's ammunition depot, draft and mobilization program, and 
surveying and mapping unit. The army's training establishments, 
including the Francisco Lopez Military College, came under the 
Military Institutes of Instruction Command — the third major army 
support element. 

Major ground force arms were heterogeneous in origin. Much 
was obsolete United States equipment, most of which was obtained 
thirdhand from Argentina and Brazil. The small armor inventory 
consisted of twelve M-4A3 medium and twelve M-3A1 light tanks. 
It was unclear how many of the United States-made tanks were 
operable. The army also had twelve United States-made M-8 and 
M-3 armored cars; twenty Brazilian-made Cascavel armored 
vehicles; three United States-made M-2 armored personnel carri- 
ers (APCs), and ten Brazilian-made Urutu APCs. Artillery pieces 
included 75mm and 105mm howitzers of French and Swedish 
manufacture, plus six British-made 152mm coastal guns. The army 
used French-made 81mm and United States-made 107mm mor- 
tars and United States-made 75mm antitank guns. Also in the 
army's inventory were eight light transport aircraft and three 
helicopters. 

The army's conscripts were trained initially in the unit to which 
they were assigned. A variety of specialty schools, including the 
Armaments School, the Signals School, and the Engineer School, 
offered advanced training. 

The Navy 

Paraguay's naval forces were first developed under Francia, who 
kept a fleet of eleven vessels. Under the presidencies of both 
Lopezes, the navy was expanded to include both a marine battal- 
ion and a naval artillery element. The navy played a significant 
role in the early part of the War of the Triple Alliance. Using the 
steam warship Tacuari, naval forces in early 1865 helped capture 
the Argentine city of Corrientes, then battied an attacking Brazilian 
fleet, first losing and then regaining control of the city. After finally 
forcing the Brazilian fleet to withdraw to Riachuelo, the Paraguayan 
navy attacked again in one of the world's largest riverine naval 
engagements. Although the battie was inconclusive, the navy's losses 
forced it to withdraw upriver. Thereafter, the navy fought a series 
of holding actions until 1868, when its forces had been almost com- 
pletely destroyed. 

For the fifty years following the end of the occupation by Brazilian 
forces in 1876, the navy remained very small. In response to ten- 
sions with Bolivia, however, it was upgraded in the late 1920s, 



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adding a small air arm in 1929 and acquiring new vessels in 1931 . 
The fleet's role in the Chaco War, however, was limited largely 
to carrying troops and supplies on the first leg of the journey into 
the Chaco and to supplying antiaircraft cover for the army. Some 
naval officers also saw service as ground force commanders. In 
addition, the naval air arm carried out important reconnaissance 
and support missions and undertook in 1934 the first night air raid 
in the Western Hemisphere. 

After the Chaco War, the navy inventory grew slowly; the 
primary acquisitions were patrol boats donated by the United States 
in 1944. The naval aviation arm benefited from donations by the 
United States and Argentina in the 1950s. The fleet was augmented 
in the 1960s and early 1970s by three United States-manufactured 
minesweepers acquired from Argentina. During the same period, 
the United States transferred or leased to Paraguay a variety of 
craft, including launches, landing craft, tugs, and support vessels. 
These were purchased outright during the 1975-77 period. The 
only major acquisition during the 1980s was a Brazilian-built river 
gunboat commissioned in 1985. 

As of late 1988, naval personnel numbered some 3,150, of whom 
approximately one-third were conscripts. These included person- 
nel assigned to the fleet, to naval aviation, and to a battalion of 
marines, as well as members of the coast guard and the harbor 
and port police. 

The ship inventory consisted of six river defense vessels, seven 
patrol craft, and three amphibious vessels, in addition to various 
support, transport, and cargo vessels (see table 11, Appendix). The 
bulk of the fleet was antiquated: five of the six river patrol vessels 
were laid down in the 1930s; the newest was of 1980s vintage. One 
large patrol craft had a wooden hull and first saw service in 1908. 

The main naval base was located in the capital at Puerto Sajo- 
nfa and included a dockyard and the naval arsenal. Secondary bases 
were located across the Rio Paraguay at Chaco i and at Bahfa Negra 
and Puerto Presidente Stroessner. 

The 500-strong marine battalion included both a regular and 
a commando regiment. It was headquartered at Puerto Sajonia, 
but most personnel were stationed on the upper Paraguay at Bahfa 
Negra and Fuerte Olimpo. 

The small naval air arm had only some fifty-five personnel 
assigned to it. It flew primarily utility and training aircraft as well 
as a few helicopters. Most equipment was located at Chaco i, 
although the helicopters sometimes were detached to two vessels 
that had helicopter platforms. 



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Paraguay: A Country Study 

The navy was also responsible for the coast guard, which main- 
tained navigational aids and guarded major river crossings. Some 
250 naval personnel manned four batteries of coastal defense guns 
on the upper part of the Rio Paraguay. The harbor police, which 
regulated the merchant fleet, was also under the navy's control. 

After training at the military academy in Asuncion, naval officers 
were sent to Argentina for advanced training in Argentine naval 
schools and on the Argentine fleet vessels. Enlisted personnel 
received basic and advanced naval training at Puerto Sajoma; some 
were also sent to Argentina to train. 

The Air Force 

The history of aviation in Paraguay began in 1912 when an army 
officer was sent to France to train and returned with a monoplane. 
Both were lost in a crash a few years later. For several years, eco- 
nomic considerations prevented further development of military 
aviation, although aircraft flown by mercenary pilots were used 
by both sides in the 1922 civil war. 

A small air element, under army control, was first developed 
in the mid- 1920s, when a flying school also was established. By 
1932 the army's air arm had twenty aircraft and was organized 
into a fighter and a reconnaissance squadron. It was no match for 
the Bolivian air force, however, and during the Chaco War, the 
air arm was used primarily for logistic and transport duties. 

The air force was established as an independent defense force 
in 1946. It split into two factions the next year, each bombing the 
forces of the other side in the 1947 civil war. After regular opera- 
tions were restored in the late 1940s, the force began to be expanded 
with the delivery of the first of a number of transports provided 
by the United States. A paratroop unit was added in 1949. Dur- 
ing the 1950s and 1960s, the nation acquired surplus aircraft from 
Argentina and Brazil. After 1975, however, Brazil emerged as the 
principal source. The only exception came in 1983 when the air 
force purchased trainers that the Chilean air force was retiring from 
service; however, these were also of Brazilian manufacture. 

As of late 1988, air force strength was approximately 1,400, half 
of whom were estimated to be conscripts. The air force was 
organized into three squadrons. The first was a composite squad- 
ron headquartered at Campo Grande. It flew the nation's only 
combat planes: Brazilian-made EMB-326 Xavante light counterin- 
surgency aircraft (see table 12, Appendix). The composite squad- 
ron also had a few Cessna liaison aircraft and ten helicopters. Most 
of the composite squadron, including the Xavantes, were based 
at President Stroessner International Airport in Asuncion. The 



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second squadron performed transport missions and had a number 
of C-47s as well as a variety of other transports. Its assets were 
located both at President Stroessner International Airport and at 
Nu Guazu (see fig. 7). The third squadron performed training mis- 
sions out of Nu Guazu and flew Chilean T-25 Universals, Brazilian 
T-23 Uirupurus, and United States T-6s acquired from Brazil. 
Primary flight training was on the Uirupurus; students then moved 
on to the Universals. There were additional airstrips located 
throughout the country, but although some of these were manned 
by air force detachments, none had flying units assigned to them. 

The paratroop battalion consisted of about 500 personnel. It was 
based at Luque, outside the capital. 

After completing the course at the military academy, air force 
officers transferred to the main base at Nu Guazu for specialist and 
flight training. NCOs and enlisted personnel were trained at schools 
operated by the air force; most were located at Nu Guazu. 

Public Order and Internal Security 

Public order was well established in the nation, and the govern- 
ment committed sufficient resources to law enforcement to main- 
tain domestic order throughout the country. Urban and rural areas 
were generally safe, as was travel throughout the country. As a 
rule, citizens were able to conduct routine day-to-day affairs peace- 
ably and without government interference. A major exception, 
however, was activity associated with opposition to the regime, to 
the Colorado Party, or to the interests of powerful and influential 
national and local figures. In these circumstances, individuals were 
likely to attract the negative attention of the police or other security 
personnel. 

Security and Political Offenses 

The tradition of authoritarian rule was deeply rooted in the 
national history and rigorously maintained by the Stroessner 
regime. The government tolerated only a narrow range of opposi- 
tion to its policies and moved quickly and forcefully to put down 
any challenges that went beyond implicit but well-recognized limits, 
that threatened to be effective, or that were raised by groups not 
enjoying official recognition. The government pointed proudly to 
the stability that Stroessner' s rule brought to Paraguay, which had 
been riven by years of political disruption. Noting that Paraguay 
escaped the instability, political violence, and upheaval that had 
troubled the rest of Latin America, government supporters dis- 
missed charges by human rights groups that such stability often 
came at the cost of individual civil rights and political liberty. 



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Paraguay: A Country Study 

The government relied on several pieces of security legislation 
to prosecute security and political offenses. Principal among these 
was the state-of-siege decree, provided for under Article 79 of the 
Constitution. With the exception of a very few short periods, a state 
of siege was in continuous effect from 1954 until April 1987. After 
1970 the state of siege was technically restricted to Asuncion. The 
restriction was virtually meaningless, however, because the judiciary 
ruled that authorities could bring to the capital those persons ac- 
cused of security offenses elsewhere and charge them under the state- 
of-siege provisions. Under the law, the government could declare 
a state of siege lasting up to three months in the event of interna- 
tional war, foreign invasion, domestic disturbance, or the threat 
of any of these. Extensions had to be approved by the legislature, 
which routinely did so. Under the state of siege, public meetings 
and demonstrations could be prohibited. Persons could be arrested 
and detained indefinitely without charge. 

The lapse of the state of siege in 1987 had little effect on the 
government's ability to contain political opposition as of late 1988. 
Other security legislation could be used to cover the same range 
of offenses. The most important of these provisions was Law 209, 
"In Defense of Public Peace and Liberty of Person." This law, 
passed in 1970, lists crimes against public peace and liberty, 
including the public incitement of violence or civil disobedience. 
It specifies the limits on freedom of expression set forth in Article 
71 of the Constitution, which forbids the preaching of hatred 
between Paraguayans or of class struggle. Law 209 raises penal- 
ties set forth in earlier security legislation for involvement in groups 
that seek to replace the existing government with a communist 
regime or to use violence to overthrow the government. It makes 
it a criminal offense to be a member of such groups and to support 
them in any form, including subscribing to publications; attend- 
ing meetings or rallies; and printing, storing, distributing, or sell- 
ing print or video material that supports such groups. Law 209 
also sets penalties for slandering public officials. 

During the early 1980s, Law 209 was used to prosecute several 
individuals the government accused of taking part in conspiracies 
directed from abroad by Marxist-Leninist groups. Among these 
were a group of peasants who hijacked a bus to the capital in 1980 
to protest being evicted from their land. In 1983 members of an 
independent research institute that published data on the economy 
and other matters were arrested after a journal published by the 
institute carried articles calling for the formation of a student- 
worker-peasant alliance. Human rights groups, critical of trial 
procedures and the evidence in the two cases, questioned the 



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National Security 



existence of a foreign-directed conspiracy, asserting instead that 
the cases represented carefully selected attempts to discourage 
organized opposition. During the mid-1980s, the government used 
Law 209 principally to charge political opponents with fomenting 
hatred, defaming government officials, or committing sedition. 

The lapse of the state of siege also had little effect on the govern- 
ment's ability to handle security and political offenses because 
authorities routinely detained political activists and others without 
citing any legal justification at all. In these cases, suspects were 
held for periods of hours, days, or weeks, then released without 
ever being charged. In practice, persons subjected to arbitrary arrest 
and detention had no recourse to legal protection, and constitu- 
tional requirements for a judicial determination of the legality of 
detention and for charges to be filed within forty-eight hours were 
routinely ignored (see The Criminal Justice System, this ch.). 
According to the United States Department of State, 253 political 
opposition activists were detained at least overnight in 1987. Of 
these, thirty-nine were held for more than seven days, and formal 
charges were filed in only sixteen of the cases. 

Many of those detained were taken to police stations, armed 
forces installations, or to the Department of Investigations at police 
headquarters in Asuncion. There have been numerous well- 
documented allegations of beating in the arrest process and of tor- 
ture during detention. The government has asserted that torture 
was not a common practice and that any abuses were investigated 
and their perpetrators prosecuted under the law. National 
newspapers have carried rare accounts of a few such investigations 
and trials, but continued allegations of torture suggested that the 
problem had not been brought under control as of the late 1980s. 

The government also limited the expression of opposition views 
by denying permits for assemblies and refusing or cancelling print- 
ing or broadcasting licenses. In early 1987, an independent radio 
station suspended its broadcasts after the government refused to 
do anything about a months-long illegal jamming of its authorized 
frequencies. Meetings by the political opposition, students, and 
labor groups required prior authorization by police, who did not 
hesitate to block and repress assemblies that did not have prior 
approval, sometimes beating leaders and participants. The govern- 
ment has also restricted the travel of a few persons involved in the 
political opposition or in labor groups. Some foreign journalists 
and certain Paraguayans identified with the opposition were 
expelled. During 1987 two persons then in exile were allowed to 
return to Paraguay. The government claimed that a third, a poet, 
was also free to return. 



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Paraguay: A Country Study 



The police and the military were the main means of enforce- 
ment of the regime. During the mid-1980s, however, armed 
vigilantes associated with the Colorado Party broke up opposition 
meetings and rallies, sometimes while police looked on. Such groups 
had been active since the 1947 civil war but had been used rela- 
tively infrequendy after the 1960s. The principal group was a loosely 
organized militia known as the Urban Guards (Guardias Urbanas), 
whose members were linked with local party branches and worked 
closely with the police. A second group was led by the head of the 
Department of Investigations. The government did not appear con- 
cerned by the reemergence of such groups and may in fact have 
encouraged them. In September 1987, for example, vigilantes broke 
up a panel discussion of opposition and labor members that was 
being held in a Roman Catholic Church. The vigilantes used chains 
and clubs to attack panel members and a parish priest who tried 
to intervene. The minister of justice, who himself was the leader 
of an anticommunist association that maintained its own security 
group, later publicly commended the vigilantes. 

Numerous sources of government opposition were targets of secu- 
rity forces during the 1980s. Activity by these groups as well as 
the violent suppression of such activity disturbed public order on 
numerous occasions. 

Foremost among those groups officially viewed as a security threat 
was the Paraguayan Communist Party (Partido Comunista 
Paraguayo — PCP). Since its inception, the Stroessner government 
has justified the continuance of strict internal security policies, par- 
ticularly the prolongation of the state of siege, as necessary mea- 
sures to prevent a communist takeover. Thus, the PCP's efforts 
to establish and maintain a power base in Paraguay had been 
ineffective throughout the Stroessner regime. This anticommunist 
fervor did not abate during the 1980s, however, even though the 
PCP was completely isolated from the national population. As of 
mid- 1988, the party was estimated to have some 4,000 members, 
most operating underground. Its leaders were either in exile or 
under arrest. The party claimed to have organized new cells dur- 
ing the 1980s, but their existence could not be confirmed. Excluded 
from the principal political opposition coalition, the PCP also 
claimed to have set up its own political front and labor front in 
exile. Both front organizations appeared, however, to exist only 
on paper, if at all. 

The party was founded in 1928 and has been illegal since then, 
except for a short period in 1936 and again in the 1946-47 period 
before the PCP became involved in the 1947 civil war. The party's 
efforts to organize a general strike in 1959 were ineffective, as was 



232 




Guards at a military installation in Asuncion 
Courtesy Richard S. Sacks 

its involvement in guerrilla attacks in the early 1960s. Both efforts 
drew harsh government reprisals. The party was believed to have 
two factions. The original one, the PCP, was loyal to the Soviet 
Union. A breakaway faction, the Paraguayan Communist Party — 
Marxist-Leninist (Partido Comunista Paraguayo — Marxista-Lenini- 
sta) was formed in 1967; it was avowedly Maoist. In 1982 the 
government arrested several persons that it identified as being mem- 
bers of the pro-China wing of the PCP. Evidence in that case has 
been criticized by international human rights groups, however, and 
it was unclear as of late 1988 whether either wing of the PCP was 
active in the country at all. The party held its last conference in 
1971. 

Another illegal opposition group was the Political-Military 
Organization (Organization Polftico-Militar — OPM). The group 
was founded in 1974 by leftist Catholic students and drew some 
support from radical members of the clergy and Catholic peasant 
organizations. The government made extensive arrests of OPM 
members and sympathizers in 1976, after which operations of the 
movement declined. It was unclear whether the OPM still existed 
as of mid- 1988, but the government continued to warn of its threat, 
claiming that it was under communist control. 

The activities of illegal opposition parties — including the 
Colorado Popular Movement (Movimiento Popular Colorado — 



233 



Paraguay: A Country Study 



Mopoco), the Authentic Radical Liberal Party (Partido Liberal 
Radical Autentico — PLRA), and the Christian Democratic Party 
(Partido Democrata Cristiano — PDC) — also drew official attention. 
Members of illegal parties were subject to regular police surveil- 
lance. They have alleged that their telephones were illegally tapped 
and their correspondence intercepted. The unrecognized opposi- 
tion parties were routinely denied permits for meetings, so that any 
they held usually were broken up, often violently, by police, who 
cited them for illegally holding unauthorized assemblies. In 1979 
these three parties joined with a legally recognized opposition party, 
the PRF, in a coalition known as the National Accord (Acuerdo 
Nacional). Leaders of this coalition, whether members of legal or 
illegal parties, were also subject to detentions and deportations (see 
Opposition Parties, ch. 4). 

Independent labor unions were another object of surveillance 
by government security forces in the 1980s. Most labor unions 
belonged to the Paraguayan Confederation of Workers (Confeder- 
acion Paraguay a de Trabaj adores), which was allied with the 
government and carefully controlled by it (see Interest Groups, 
ch. 4). Although workers not sponsored by the official confedera- 
tion were not authorized to organize freely, some independent labor 
unions had been given official recognition. Their activities, however, 
were closely monitored by the police, who sent representatives to 
all meetings. Despite tight controls — Paraguayan law made it vir- 
tually impossible to call a legal strike — a number of labor-related 
public disturbances took place in the mid-1980s. In April 1986, 
for instance, a peaceful protest by a medical workers' association 
in Asuncion was forcibly broken up by police. Vigilante groups 
associated with the Colorado Party were also active in intimidat- 
ing and assaulting the doctors, nurses, and technicians involved, 
as well as university students who joined in subsequent demon- 
strations supporting the medical workers. Hundreds of demonstra- 
tors organized by an independent workers' movement were clubbed 
and beaten in the capital in May 1986. Continued demonstrations 
in support of the jailed demonstrators and medical workers also 
drew police action. 

In 1985 student demonstrations disturbed public order in the 
capital for the first time in twenty-five years. An estimated 2,000 
students clashed with police in April of that year. After a student 
was shot to death in the clash, more demonstrations followed, and 
part of the National University was closed for several days. Since 
that time, students have been prominent in demonstrations 
organized by several other groups. 

Land tenure issues were also apparent in outbreaks of public 



234 



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violence. Several incidents involved arrests by military and police 
personnel of militant landless peasants who were squatting on pri- 
vate or public land (see Land Tenure, ch. 3; Interest Groups, 
ch. 4). In 1986 three squatter incidents were publicized in the local 
press; after military involvement in the shooting deaths of two 
peasants was revealed, the military made efforts to leave action in 
similar cases to the police. Local community leaders chosen to 
represent peasants in negotiations with the government over land 
tenure issues have also been subject to harassment by local police 
and judicial officials. Reports have appeared in both the national 
and international press about abuses of the rights of the nation's 
small, unassimilated Indian population. Most frequently, abuses 
were alleged to occur in land disputes. The abuses appeared to result 
from the relative powerlessness of the Indian population vis-a-vis 
local landowners and the remoteness of tribal areas. 

The government controlled most print media, both television 
channels, and most radio stations and tolerated only limited criti- 
cism from the press. Major media usually avoided criticizing the 
president, his family, the military, and key civilian leaders. Topics 
related to official corruption and national security were also gener- 
ally avoided, and coverage of the political opposition was strictly 
limited. Violations of these rules were answered with force 
eventually — sometimes immediately — by the government (see The 
Media, ch. 4). 

During the mid-1980s, the Roman Catholic Church emerged 
as a leader of antigovernment forces. The church was openly 
opposed to the Stroessner regime during the 1960s and early 1970s, 
until the government cracked down, sending troops into the pri- 
vate Catholic University on more than one occasion and eventu- 
ally leaving it in shambles. The harsh government response was 
followed by several years of relative quiet from the church. Dur- 
ing the mid-1980s, church officials offered to serve as a bridge for 
the reconciliation of the government and the opposition but were 
turned down by the government. Roman Catholic bishops also 
began to take a larger role in pressing for a transition to democ- 
racy and investigation of human rights abuses. The wave of 
antigovernment protests in 1986 and the government's forcible 
response, however, appeared to have inspired the church to take 
a more overt political stance. In May 1986, the archbishop of Asun- 
cion announced a series of protests that culminated in the ringing 
of church bells throughout the capital. Some 800 priests and mem- 
bers of religious orders, joined by members of the opposition par- 
ties and other people, led a march of silence in the capital in October 
1987. The government permitted the crowd — estimated at 40,000 — 



235 



Paraguay: A Country Study 



to proceed peacefully. Provincial clergy, long active among the rural 
poor, also have been involved in land tenure disputes and in set- 
ting up peasant cooperative enterprises. Activities in both areas 
have been met with displeasure by local landowners and have 
resulted in clashes with the military and with local police. Follow- 
ing the government's closure in 1984 of ABC Color, the Roman 
Catholic Church's newspaper, Sendero, became an important source 
of information on opposition activities. 

Crime 

As a matter of policy, the government did not publish statistics 
on crime, so it was impossible to determine the incidence of crime, 
the frequency of particular crimes, or the direction of overall crime 
rates. 

The nation had a relatively homogeneous population, however, 
and did not appear to be troubled by the high rates of ordinary 
crimes, such as murder, assault, and theft, that have been associated 
with ethnic tensions or class divisions found in other areas of Latin 
America. However, three special types of crimes — corruption, 
smuggling, and drug trafficking — attracted media attention both 
locally and internationally in the 1980s. 

Official corruption has been a very sensitive issue throughout 
the Stroessner regime and remained so during the late 1980s. 
National standards of public conduct appeared to accommodate 
a certain amount of personal intervention on behalf of family mem- 
bers, friends, and business associates. It was widely agreed, 
however, both within the nation and outside it, that serious breaches 
of these standards by senior civilian and military officials were rarely 
investigated or prosecuted. Indeed, efforts by officials to generate 
wealth or to influence the outcome of legal or business decisions, 
either on their own behalf or on that of relatives, friends, or 
associates, were treated by the government as a perquisite of office 
and a reward for loyalty. Allegations of high-level corruption and 
graft in the local press were officially frowned upon, and displeas- 
ure was expressed overtly by confiscating publications and arrest- 
ing journalists and publishers. Nonetheless, some investigations 
and arrests of alleged perpetrators have taken place and been 
reported. One example was the arrest in late 1985 of twenty-nine 
senior bureaucrats and businessmen on charges of embezzlement 
of an estimated US$100 million from the Central Bank. 

Involvement or connivance in smuggling appeared to be a sig- 
nificant element of official corruption. Most observers have esti- 
mated that the volume of illegal foreign trade at the very least came 
close to matching that of legal commerce during the mid-1980s and 



236 



National Security 



possibly surpassed it (see External Trade, ch.3). In 1987 the leader 
of a business association of commercial and industrial interests 
estimated that contraband accounted for two- thirds of Paraguay's 
foreign trade. The avoidance of import duties represented a seri- 
ous loss of revenue to the government. The flood of cheaper goods 
also harmed local producers, who could not compete with the 
artificially low prices of smuggled goods. The illegal commerce also 
had raised tensions with Brazil because it undercut Brazil's own 
economy (see Argentina and Brazil, ch. 4). 

Smuggling has had a long history in Paraguay. During the 1950s, 
most operators worked on a small scale, but by the 1960s it was 
apparent that several persons had made fortunes in the trade. Dur- 
ing the 1970s, smugglers moved into exports as well as imports. 
The trade began by focusing on such luxury items as whiskey and 
cigarettes, but by the 1980s, smuggled goods included electronic 
goods, appliances, and even commodities such as wheat. Logs taken 
from Eastern Paraguay and sold in Brazil were a major illegal export 
item. The growing disparity between official exchange rates and 
market exchange rates during the 1980s made the trade increas- 
ingly lucrative, because traders were able to buy goods outside the 
country at market rates and then sell them in Paraguay at a price 
that was below that of legally imported goods but still high enough 
to render a substantial profit. Movement of the heavy volume of 
illegal trade necessitated crossing river borders patrolled by the navy 
and crossing land borders and road checkpoints patrolled by the 
army and the police. Entry by air entailed transport through air- 
ports controlled by the air force. Despite these controls, few smug- 
glers were arrested as the trade in illegal goods burgeoned and illegal 
markets thrived openly in the capital and other cities, especially 
Puerto Presidente Stroessner, which borders Brazil. The appar- 
ent tolerance of smuggling and the fact that several senior military 
and civilian officials had unaccounted-for sources of wealth con- 
tributed to a widely held local belief that there was official involve- 
ment in the trade. 

An especially serious outgrowth of smuggling was the expansion 
into drug trafficking during the early 1980s, when Paraguay 
emerged as a transit point in the international drug trade. The 
nation was well situated for the role. It was located near Bolivia 
and Peru, which were major Latin American sources of illegal 
drugs. Moreover, Paraguay's sparsely populated and remote border 
areas presented difficulties for police surveillance. The nation had 
been used as a transit point during the 1960s, but international 
and local efforts had shut down the trade by the early 1970s. A 
series of seizures of drugs and of chemicals used to refine them 



237 



Paraguay: A Country Study 

during the 1984-87 period suggested that the problem had resur- 
faced, however. The problem first reached public attention in 1984 
when a large quantity of chemicals used to refine coca paste into 
cocaine was seized by authorities in Paraguay. In 1986 and 1987, 
officials in Panama and Belgium discovered large amounts of 
cocaine that had been shipped from Paraguay. Again in 1987, evi- 
dence of Paraguayan involvement in drug trafficking surfaced after 
a plane carrying a major shipment of cocaine crashed in Argen- 
tina, having taken off in Paraguay. The Stroessner government 
denied charges by United States government officials that 
Paraguayan military and civilian officials were involved in the trade 
and vowed to take a tough stand against any drug traffickers. 
According to a United States Department of State official, Paraguay 
was also a major producer of marijuana for export. 

The Police 

The police had a long history in Paraguay. Francia maintained 
the nation's first police establishment, using it to enforce his com- 
plete control of the state. Under him, the police maintained a wide- 
reaching spy network that moved ruthlessly to suppress dissent and 
generated an atmosphere of fear. The police have remained a 
powerful and politicized institution ever since. Until the mid-1950s, 
the police often served as a counterweight to the armed forces, but 
after police officials were implicated in an abortive coup against 
Stroessner in late 1955, the force was purged, and police paramili- 
tary units were sharply cut back. Since then, the police chief has 
almost always been a serving or retired army officer. Army officers 
have also held many key positions in the police hierarchy. 

The Paraguayan police force was a centralized organization under 
the administration of the minister of interior. The force comprised 
two main elements, one for the capital and another for the rest 
of the nation. A separate highway police patrolled the nation's 
roads and was administered by the minister of public works and 
communication . 

In 1988 police strength was estimated at 8,500 personnel; about 
4,500 were assigned to the capital and the rest to the nation's 19 
departments. The ratio of police to the rest of the population was 
one of the world's highest. Most rank-and-file police personnel were 
two-year conscripts who generally served outside their home area. 

The capital police force was headed by a chief of police. Police 
personnel were assigned to headquarters or to one of twenty-three 
borough precincts. Police headquarters had three departments. The 
regular police, who dealt with ordinary crime, as well as having 
traffic-control, mounted, and motorized elements, came under the 



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National Security 



administration of the Department of Public Order. The Department 
of Investigations, an internal security organ, dealt with political 
and security offenses. The Department of Training and Opera- 
tions handled police administration and planning and ran police 
training establishments. Several directorates at police headquarters 
specialized in particular areas; among these were surveillance and 
offenses, identification, alien registration, and politics. A separate 
directorate specializing in political intelligence — formerly the sole 
province of the army staffs intelligence section — was established 
in mid- 1987. Police personnel also ran the capital's fire department. 

A special unit of the capital police was the Security Guard, a 
400-strong unit called up in cases of emergency and used in ceremo- 
nies and parades. About one-half of the unit, which had two rifle 
companies, was manned by conscripts. 

Police in the interior were under the control of the government 
delegate heading the department in which police operated. For 
police functions, the delegate was in turn responsible to the minister 
of interior. Each delegate usually had a police chief who handled 
routine matters, an investigative section to process the identity cards 
carried by all citizens, and an additional person to supervise police 
arrests with a view to bringing charges. Departments were divided 
into districts in which a justice of the peace had several police con- 
scripts assigned to him to carry out guard and patrol duties and 
other routine police functions. 

All police training took place in Asuncion. Basic training was 
given at the Police College, which offered a five-year course in 
modern police techniques. The Higher Police College offered 
specialized training. The police also operated a school for NCOs 
and an in-service training battalion. 

The Criminal Justice System 

In practice the criminal justice system was composed of two 
parallel structures. The first comprised the formal legal system 
set forth in the Constitution and in numerous statutes that pro- 
vided for an independent judiciary and that specified legal proce- 
dures (see The Judiciary, ch. 4). The second system was one in 
which political and economic clout determined the outcome of 
conflict resolution. When the two structures clashed, the second 
was generally perceived to prevail. The widespread perception that 
the criminal justice system was susceptible to economic and poli- 
tical manipulation meant that few people were willing to confront 
police, military, or political authority. 



239 



Paraguay: A Country Study 



The Penal Code 

During the colonial period, criminal justice was administered 
in courts in what is now Paraguay according to provisions in several 
codes developed by the Spanish. Appeal in specific cases was 
referred to higher tribunals in the mother country. Many of those 
laws continued to be applied during the period following indepen- 
dence, except when Paraguayan rulers arbitrarily applied their own 
self-made law. In 1883 the nation adopted the Argentine penal code. 
This was replaced by a national code drawn up by Paraguayan 
jurists in 1890. This code was rewritten in 1910, and the new code 
proclaimed in 1914. The 1914 Penal Code, as amended, was still 
in force as of 1988. 

The code is set forth in two books, each of which has two sec- 
tions. The first section of Book I gives general provisions defining 
the application of the law and criminal liability, addressing such 
issues as mitigating circumstances, insanity, and multiple crimes. 
According to the code, active-duty members of the armed forces 
come under the jurisdiction of the Military Penal Code, as do per- 
petrators of purely military offenses. Section 2 of Book I establishes 
punishments and provides for the cancellation of legal actions and 
the exercise of prosecution functions. The death sentence was 
abolished in 1967, and the punishments provided for are imprison- 
ment, jailing, exile, suspension, fines, and disqualification. Jail- 
ing, which like imprisonment can entail involuntary labor, is served 
by those persons convicted of less serious crimes in special institu- 
tions distinct from prisons, which house those convicted of serious 
crimes that draw long-term sentences. Disqualification can entail 
loss of public office or loss of public rights, including suffrage and 
pension benefits. 

The first half of Book II of the code comprises a sixteen-chapter 
section that groups offenses into broad categories, defines specific 
types of violations, and sets penalties for each type. The major 
categories include crimes against the state, against public order and 
public authority, and against persons and property. The second half 
of Book II sets forth misdemeanor offenses and their punishments. 

Criminal Procedure 

Sources of procedural criminal law are the Constitution, special 
laws, the Penal Code, and the Code of Penal Procedure. These 
sources govern pleading and practices in all courts as well as 
admission to the practice of law. 

The entire court system was under the control of the national 
government. In addition to the judiciary, which was a separate 



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National Security 



branch of government, the Ministry of Justice and Labor 
was also involved in the administration of justice. It was respon- 
sible for judicial officers attached to the attorney general's office. 
These officials were assigned to the various courts and repre- 
sented the government in trial proceedings. The ministry was also 
responsible for the judiciary's budget and the operation of the penal 
system. 

At the apex of the criminal court system was the Supreme Court 
of Justice, which was made up of five justices appointed by the 
president. Below the Supreme Court of Justice, which was respon- 
sible for the administration of the judiciary, was the criminal court 
of appeal. Both courts were located in Asuncion. Courts of origi- 
nal jurisdiction were divided between the courts of the first instance, 
which heard serious cases, and justice of the peace courts, whose 
jurisdiction was limited to minor offenses. There were six courts 
of the first instance in the country during the 1980s. There were 
far more justice of the peace courts, but the exact number was not 
publicly available. 

Although theoretically a coequal branch of government, the 
judiciary, along with the legislature, has traditionally been subor- 
dinate to the executive. Members of the judiciary were appointed 
by the president and served a five-year term coinciding with that 
of the president. In practice, the courts rarely challenged govern- 
ment actions. Under the law, the Supreme Court of Justice had 
jurisdiction over executive actions, but it continued not to accept 
jurisdiction in political cases as of mid- 1988. The independence 
of the judiciary was also made problematic by the executive's com- 
plete control over the judiciary's budget. Moreover, during the 
Stroessner regime, membership in the Colorado Party was a vir- 
tual requirement for appointment to the judiciary; in 1985 all but 
two judges were members. Many justices of the peace, in particu- 
lar, were appointed by virtue of their influence in their local com- 
munities. During the mid-1980s, the government made an effort 
to improve the public image of judges, suspending a small num- 
ber for corruption. It appeared, however, that more would be neces- 
sary to promote public confidence in judicial independence. 

The Constitution theoretically guarantees every citizen the rights 
of due process, presumption of innocence, prohibition against self- 
incrimination, and speedy trial. It protects the accused from ex 
post facto enactments, unreasonable search and seizure, and cruel 
and unusual punishment. Habeas corpus protection is extended 
to all citizens. 

Criminal actions can be initiated by the offended party or by 
the police acting under the direction of a judicial official. According 



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Paraguay: A Country Study 

to the law, police had to secure warrants to arrest suspects or to 
conduct searches unless a crime was in progress while the police 
were present. Police could detain suspects for only twenty-four hours 
without pressing charges. Within forty-eight hours, a justice of the 
peace had to be informed of the detention. Upon receiving the 
charges of the police and determining that there were grounds for 
those charges, the justice of the peace then took action according 
to the gravity of the offense charged. In the case of misdemeanors, 
the justice of the peace was empowered to try the suspect and to 
pass sentences of up to thirty days in jail or an equivalent fine. 
In the case of felonies, a justice of the peace, although not possess- 
ing authority to try the case, performed several important func- 
tions. If upon hearing the charges, the justice of the peace 
determined that there were grounds to suspect the individual 
charged, he informed the suspect of charges against him or her, 
fixed a time within twenty-four hours to permit the suspect to 
present an unsworn statement, established a time for witnesses to 
make sworn statements, and determined a time for inspecting the 
scene of the crime. 

After investigation and the receipt of the suspect's unsworn state- 
ment, the justice of the peace could order the suspect to be held 
in preventive detention, if necessary for up to three days incom- 
municado. This period was renewable for additional three-day peri- 
ods and was intended to prevent the suspect from communicating 
with coconspirators still at large. Justices of the peace could also 
order impoundment of a suspect's goods, except those needed by 
his or her family. 

Finally, the justice of the peace prepared the case for trial in the 
criminal court of the first instance. This preparation was done by 
assembling the evidence into a document known as the summary 
and sending it to the higher court along with supporting documents 
such as statements of witnesses. The investigative stage of crimi- 
nal proceedings was limited by law to two months — subject to a 
formal petition for extension. 

Despite these important responsibilities, many justices of the 
peace were not qualified lawyers. Therefore, in several of the larger 
cities, a special official, known as a proceedings judge, took over 
the most difficult cases before sending the information to Asun- 
cion for trial. These judges were empowered to release suspects 
on bail — something a justice of the peace could not do. 

Trials were conducted almost exclusively by the presentation of 
written documents to a judge who then rendered a decision. As 
was true for most Latin American nations, Paraguay did not have 
trial by jury. Verdicts were automatically referred to the appellate 



242 



National Security 



court and in some cases could be appealed further to the Supreme 
Court of Justice. A portion of the trial was usually open to the public. 

The safeguards set forth in the Constitution and in legal statutes 
often were not honored in practice. The police frequently ignored 
requirements for warrants for arrest and for search and seizure. 
Legal provisions governing speedy trial were ineffective, and de- 
lays were legendary. Most accused persons were released before 
trial proceedings were complete because they had already been 
detained for the length of time prescribed for their alleged offense. 
A 1983 United Nations study found that Paraguay had the highest 
rate of unsentenced prisoners in the Western Hemisphere. 
Moreover, defense lawyers, particularly in security and political 
cases, were subjected to police harassment and sometimes to arrest. 

The Prison System 

In 1988 the operation of prisons was under the General Direc- 
torate of Penal Institutions, controlled by the Ministry of Justice 
and Labor. According to Article 65 of the Constitution, penal 
institutions are required to be healthful and clean and to be dedi- 
cated to rehabilitating offenders. Economic constraints made con- 
ditions in prisons austere, however, and overcrowding was a serious 
problem. A report by an independent bar association in the early 
1980s criticized the prison system for failing to provide treatment 
for convicts. 

The National Penitentiary in Asuncion was the country's prin- 
cipal correctional institution. Observers believed that the total popu- 
lation of the institution averaged about 2,000, including political 
prisoners. Another prison for adult males was the Tacumbu 
Penitentiary located in Villa Hayes, near Asuncion. 

Women and juveniles were held in separate institutions. Females 
were incarcerated in the Women's Correctional Institute under the 
supervision of the Sisters of the Good Shepherd. The institution 
offered courses in domestic science. A correctional institute for minors 
was located in Emboscada, which was also near the capital. It stressed 
rehabilitating inmates and providing them with skills that would help 
them secure employment when their sentences were completed. 

In addition to the penal institutions in the Central Department, 
each of the other departments maintained a prison or jail in its cap- 
ital. Many smaller communities did not have adequate facilities 
even for temporary incarceration, however. A suspect receiving 
a sentence of more than one year usually was transferred to a na- 
tional penitentiary. 

* * * 



243 



Paraguay: A Country Study 

As of late 1988, no definitive studies that deal comprehensively 
with national security matters in contemporary Paraguay had been 
published. A general treatment of modern Paraguayan political life, 
touching on the military and its place in the national life, can be 
found in two works by Paul H. Lewis: Paraguay Under Stroessner and 
Socialism, Liberalism, and Dictatorship in Paraguay. The most complete 
coverage of the history and development of the armed forces is con- 
tained in the section, "Paraguay," in Adrian J. English's Armed 
Forces of Latin America. For developments since 1980, the reader must 
search through issues of the Latin American Weekly Report [London], 
the Latin America Report prepared by the Joint Publications Research 
Service, and the Daily Report: Latin America put out by the Foreign 
Broadcast Information Service. Current order-of-battle data are 
available in the International Institute of Strategic Studies' excel- 
lent annual, The Military Balance. The best overview of conditions 
of public order is contained in the section on Paraguay in Country 
Reports on Human Rights Practices, a report submitted annually by 
the United States Department of State to the United States Con- 
gress. Two reports by the Americas Watch Committee — Paraguay: 
Latin America's Oldest Dictatorship Under Pressure and Rule by Fear: 
Paraguay After Thirty Years Under Stroessner — also provide data on the 
treatment of political and security offenses under the criminal justice 
system as well as the government's observance of human rights. 
(For further information and complete citations, see Bibliography.) 



244 



Appendix 



Table 

1 Metric Conversion Coefficients 

2 Population Growth, Selected Years, 1886-1982 

3 Population and Intercensal Growth Rates, 1950-82 

4 Educational Enrollment by Age-group, 1965 and 1985 

5 Inoculation of Children Under One Year of Age, 1981-84 

6 Deaths by Age-group, 1981-84 

7 Balance of Payments, Selected Years, 1980-86 

8 Presidential Election Results, 1954-88 

9 Composition of the Paraguayan Army, 1988 

10 Major Equipment of the Paraguayan Army, 1988 

11 Major Equipment of the Paraguayan Navy, 1988 

12 Major Equipment of the Paraguayan Air Force, 1988 



245 



Appendix 



Tnhh 7 


Metric Conversion Coefficients and Factors 


When you know 


Multiply by 


To find 






inches 


Centimeters 


0.39 


inches 




3.3 


feet 




0.62 


miles 


Hectares (10,000 m 2 ) . 


O A 1 


acres 


Square kilometers . . . 


0.39 


square miles 




35.3 


cubic feet 




, 0.26 


gallons 




2.2 


pounds 




0.98 


long tons 




1.1 


short tons 




2,204 


pounds 




9 


degrees Fahrenheit 


(Centigrade) 


divide by 5 






and add 32 





Table 2. Population Growth, Selected Years, 1886-1982 



Census Annual Intercensal Growth Rate 

Year Total Population (in percentage) 



1886-87 329,645 

1914 650,451 2.5 

1924 828,968 2.5 

1936 992,420 1.5 

1950 1,343,100 2.2 

1962 1,854,400 2.7 

1972 2,357,955 2.7 

1982 3,026,165 2.5 



Source: Based on information from Paraguay, Direccion General de Estadistica y Censos, 
Censo national de poblacion y viviendas, 1982: Cifras provisionals, Asuncion, December 
1982, 30. 



247 



Paraguay: A Country Study 



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248 



Appendix 



Table 4. Educational Enrollment by Age-group, 1965 and 1985 
(in percentage) 



Level 


Sex 


1965 


1985 


Primary 


Male 


109 * 


104 * 




Female 


96 


98 




Total 


102 * 


101 * 


Secondary 


Male 


13 


31 




Female 


13 


30 




Total 


13 


31 


Tertiary 


Total 


4 


10 



* Gross enrollment sometimes exceeded 100 percent, because some pupils might be younger or older 
than the standard primary-school age. 



Source: Based on information from World Bank, World Development Report: 1988, New York, 
1988. 



Table 5. Inoculation of Children Under One Year of Age, 1981-84 
(in percentage) 



Vaccine 1981 1982 1983 1984 



Tuberculosis 42 47 55 80 

DPT * 28 34 45 67 

Poliomyelitis 26 39 47 68 

Measles 16 27 37 62 



* Diphtheria, pertussis, and tetanus. 

Source: Based on information from Pan American Health Organization, Health Conditions 
in the Americas, 1981-1984, II, Washington, 1986, 188, 



Table 6. Deaths by Age-group, 1981-84 



Percentage of all Deaths Rate per 1,000 Inhabitants 

Age-Group 1981 1982 1983 1984 1981 1982 1983 1984 



Less than 1 21 21 20 20 59.0 51.2 51.0 49.8 

1-4 7 7 7 8 4.2 3.8 4.1 4.1 

5-14 3 3 3 3 0.6 0.7 0.7 0.7 

15 and over 69 69 70 69 7.5 7.7 8.1 8.0 

TOTAL 100 100 100 100 6.9 6.4 6.7 6.6 



Source: Based on information from Pan American Health Organization, Health Conditions 
in the Americas, 1981-1984, II, Washington, 1986, 185. 



249 



Paraguay: A Country Study 



Table 7. Balance of Payments, Selected Years, 1980-86 
(in millions of United States dollars) 

1980 1982 1984 1986 



Merchandise 

Exports (f.o.b.) * 

Registered exports 

Unregistered exports 

Total exports 

Imports (f.o.b.) * 

Registered imports 

Unregistered imports 

Total imports 

Trade Balance 

Services 

Credits 

Debits 

Net services 

Income 

Receipts 

Payments 

Net income 

Transfers 

Official 

Private 

Net transfers 

Current account balance 

Net Direct foreign investment 

Long-term loans 

Official sources 

Private sources 

Net long-term loans 

Other capital 

Net short-term loans 

Errors and omissions 

Net other capital 

Overall balance 

excluding Itaipu hydroelectric plant . . 

Net inflows related to 

Itaipu hydroelectric plant 

Overall balance 

Changes in reserves 

(-means increase) 



311.0 
271.9 
582.9 


329.9 
162.1 
492.0 


334.5 
143.4 
477.9 


232.5 
138.4 
370.9 


675.3 
379.0 
1054.3 


723.4 
124.5 
847.9 


661.0 
99.5 
760.5 


518.1 
379.7 
897.8 


-471.4 


-355.9 


-282.6 


-526.9 


118.1 
260.0 
-141.9 


177.5 
360.9 
-183.4 


103.6 
194.9 
-91.3 


174.4 
264.9 
-90.5 


80.2 
84.5 
-4.3 


122.9 
91.3 
31.6 


70.7 
91.6 
-20.9 


62.0 
106.0 
-44.0 


4.8 
-0.3 
4.5 


3.5 
1.5 
5.0 


6.8 
2.5 
9.3 


12.5 
0.6 
13.1 


-613.1 


-502.7 


-385.5 


-648.3 


29.8 


33.7 


0.5 


31.0 


36.4 
89.1 
125.5 


106.1 
137.7 
243.8 


136.5 
25.7 
162.2 


96.5 
1.0 
97.5 


0.0 
203.6 
203.6 


-82.0 
-168.7 
-250.7 


-35.0 
-51.7 
-86.7 


-44.7 
375.1 
330.4 


-254.2 


-475.9 


-309.5 


-189.4 


405.1 


345.7 


213.2 


110.0 


150.9 


-130.2 


-96.3 


-79.4 


-150.9 


130.2 


96.3 


79.4 



* Free on board. 



250 



Appendix 



Table 8. Presidential Election Results, 1954-88 
(as reported by the government) 



Year 


Total 
Votes 


Colorado 
Party 


Radical 
Liberal 
Party 


Liberal 
Party 


Febrerista 
Revolutionary 
Party 


Blank/ 
Annulled 
Votes 


1954 


239,978 


236,191 
(98.4%) 




— 


— 


3,787 
(1.6%) 


1958 


303,478 


295,414 
(97.3%) 




— 


— 


8,064 
(2.7%) 


1963 


628,615 


569,551 
(90.6%) 




47,750 1 
(7.6%) 


— 


11,314 
(1.8%) 


1968 


656,414 


465,535 139,622 
(70.9%) 2 (21.3%) 


27,965 

3 /o ) 


16,871 

(1 &07„\ 

^z.o /o ; 


6,421 


1973 


814,610 


681,306 
(83.6%) 


98,096 

(12%) 


24,611 

(3%) 




10,597 
(1.3%) 


1978 


1,091,994 


990,774 
(90.7%) 


54,984 
(5%) 


37,059 
(3.4%) 




9,177 
(.8%) 


1983 


1,048,886 


944,637 
(90.1%) 


59,094 
(5.6%) 


34,010 
(3.2%) 




11,145 
(1.1%) 


1988 


1,339,003 


1,187,738 
(88.7%) 


95,500 
(7.1%) 


42,442 
(3.2%) 




13,323 
(1%) 



— Means did not participate. 

1 Participated as the Renovation Movement. 

2 Percentages for some elections do not add to 100 because of rounding. 

Source: Based on information from El Diario de noticias [Asuncion], February 14, 1988; and 
Foreign Broadcast Information Service, Daily Report: Latin America. (FBIS- 
LAT-88-033A.) Washington, February 19, 1988, 38. 



251 



Paraguay: A Country Study 

Table 9. Composition of the Paraguayan Army, 1988 



Type of Unit Number 



Presidential Escort Regiment 1 * 

Corps headquarters 3 

Infantry divisions 8 

Cavalry division 1 

Artillery battalions 3 

Engineer battalions 6 

Signals and transport battalion 1 



TOTAL STRENGTH 12,500 



* Administered independently. 



Table 10. Major Equipment of the Paraguayan Army, 1988 

Equipment Number Source 



M-4A3 Sherman and Sherman 








12 


Argentina (United States-made) 


M-3A1 light tanks 


12 


Brazil (United States-made) 


M-8 and M-3 armored cars 


12 


Brazil (United States-made) 


EE-9 Cascavel armored cars 


20 


Brazil 


M-2 modified half-track armored 








3 


Brazil (United States-made) 


EE- 11 Urutu armored personnel 








10 


Brazil 


152mm Vickers Mk V coastal guns 


6 


Britain 


75mm Bofors Model 1927/34 








25 


Argentina (Swedish-made) 




48 


France 




n.a. 


France 




n.a. 


United States 




n.a. 


United States 




20 


n.a. 


40mm M-1A1 air defense guns . . . 


10 


United States 



Army Aviation 

Fokker S-ll aircraft 8 Brazil (United States-made) 

Bell 47G helicopters 3 Brazil (United States-made) 

n.a. — not available. 



252 



Appendix 



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253 



Paraguay: A Country Study 

Table 12. Major Equipment of the Paraguayan Air Force, 1988 



Type of Aircraft Number 



Composite Squadron 

EMB-326 Xavante light counterinsurgency aircraft 8 

Cessna aircraft (337, 402, 185 Skywagon) 7 

Bell OH-13A helicopters 8 

Hiller UH-12 helicopters 2 

Transport Squadron 

Douglas DC-6B 3 

Douglas C-54 transport aircraft 2 

Douglas C-47 transport aircraft 11 

DeHavilland Canada DHC-6 Twin Otter 1 

DeHavilland Canada DHC-3 Otter 1 

CASA C-212 Aviocar 4 

Convair PBY-5A Catalina amphibious aircraft 1 

Training Squadron 

Neiva T-25 Universal 10 

Aerotec T-23 Uirupuru 8 

North American T-6 Texan armed trainers 7 



254 



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Affairs, and Senate, Committee on Foreign Relations.) Washing- 
ton: GPO, 1986. 

. Department of State. Country Reports on Human Rights Prac- 
tices for 1986. (Report submitted to United States Congress, 100th, 
2d Session, House of Representatives, Committee on Foreign 
Affairs, and Senate, Committee on Foreign Relations.) Washing- 
ton: GPO, 1987. 

. Department of State. Country Reports on Human Rights Prac- 
tices for 1987. (Report submitted to United States Congress, 101st, 
1st Session, House of Representatives, Committee on Foreign 
Affairs, and Senate, Committee on Foreign Relations.) Washing- 
ton: GPO, 1988. 

Williams, John Hoyt. "Paraguay's Stroessner: Losing Control?" 
Current History, 86, No. 516, January 1987, 25-8. 

. " Stroessner' s Paraguay," Current History, 82, No. 469, 
February 1983, 66-8. 

Yearbook on International Communist Affairs 1976. (Ed., Richard F. 
Staar.) Stanford: Hoover Institution Press, 1976. 

Yearbook on International Communist Affairs 1987. (Ed. Richard F. 
Staar.) Stanford: Hoover Institution Press, 1987. 

Yearbook on International Communist Affairs 1988. (Ed. Richard F. 
Staar.) Stanford: Hoover Institution Press, 1988. 

(Various issues of the following publications were also used in 
the preparation of this chapter: Economist Intelligence Unit, Coun- 
try Report: Uruguay, Paraguay [London]; Foreign Broadcast Infor- 
mation Service, Daily Report: Latin America; Joint Publications 
Research Service, Latin America Report; Latin American Weekly 
Report [London]; New York Times; Nuestro Tiempo [Asuncion]; and 
Washington Post.) 



270 



Glossary 



desarrollismo — A post-World War II school of thought in Latin 
America emphasizing rapid economic development through im- 
port substitution and industrialization. 

fiscal year (FY) — Calendar year. 

GDP — gross domestic product. A measure of the total value of 
goods and services produced by the domestic economy during 
a given period, usually one year. Obtained by adding the value 
contributed by each sector of the economy in the form of profits, 
compensation to employees, and depreciation (consumption of 
capital). The income arising from investments and possessions 
owned abroad is not included, only domestic production. 
Hence, the use of the word "domestic" to distinguish GDP 
from GNP (q.v.). 

GNP — gross national product. Total market value of all final goods 
and services produced by an economy during a year. Obtained 
by adding GDP (q.v.) and the income received from abroad 
by residents less payments remitted abroad to nonresidents. 

guaram (G) — The national currency. From 1960 to 1982 the 
guaram remained pegged to the United States dollar at 
G126=US$1 . Responding to the completion of construction of 
the Itaipii hydroelectric plant and lower commodity prices for 
soybeans and cotton, in July 1982 the Central Bank established 
a multitiered exchange rate system. The most favorable rate 
was reserved for the imports of certain state-owned enterprises 
and for external debt-service payments. Three other controlled 
rates were applied to imports of petroleum and petroleum 
derivatives; disbursements of loans to the public sector; and 
agricultural imports and most exports. Commercial banks set 
a fifth, free-market rate that governed most of the private sec- 
tor's nonoil imports. In early 1988, these five rates were 
G240=US$1, G320=US$1, G400=US$1, G550=US$1, and 
approximately G900=US$1, respectively. The multitiered 
system constituted a massive subsidy to state-owned enter- 
prises. Central Bank losses in controlled exchange rate trans- 
actions accounted for nearly half of public-sector deficit in 
1986. In July 1988, the Central Bank eliminated the two most 
favorable exchange rates; set G400=US$1 as the rate for im- 
ports of state-owned enterprises, external debt-service pay- 
ments, and petroleum imports; and established G550=US$1 
as the rate for disbursements of loans to the public sector, 



271 



Paraguay: A Country Study 

agricultural imports, and most exports. In January 1989, the 
Central Bank further devalued the guaram by setting the con- 
trolled rates at <S600=US$1 and <S750=US$1 and also required 
petroleum imports to be paid at the higher rate. In early 1989, 
the free-market rate exceeded (S1,000=US$1. 

IMF — International Monetary Fund. Established along with the 
World Bank (q.v.) in 1945, the IMF is a specialized agency 
affiliated with the United Nations that takes responsibility for 
stabilizing international exchange rates and payments. The 
main business of the IMF is the provision of loans to its mem- 
bers when they experience balance-of-payments difficulties. 
These loans often carry conditions that require substantial in- 
ternal economic adjustments by the recipients. 

informal sector— The sector of the economy beyond government 
regulation and taxation. Most active in urban areas among 
those involved in simple manufacturing and commercial and 
other services. 

Southern Cone — name for area of South America consisting of 
Argentina, Chile, Paraguay, and Uruguay. 

World Bank — Informal name used to designate a group of three 
affiliated international institutions: the International Bank for 
Reconstruction and Development (IBRD), the International 
Development Association (IDA), and the International Finance 
Corporation (IFC). The IBRD, established in 1945, has the 
primary purpose of providing loans to developing countries for 
productive projects. The IDA, a legally separate loan fund 
administered by the staff of the IBRD, was set up in 1960 to 
furnish credits to the poorest developing countries on much 
easier terms than those of conventional IBRD loans. The IFC, 
founded in 1956, supplements the activities of the IBRD 
through loans and assistance designed specifically to encourage 
the growth of productive private enterprises in less developed 
countries. The president and certain senior officers of the IBRD 
hold the same positions in the IFC . The three institutions are 
owned by the governments of the countries that subscribe their 
capital. To participate in the World Bank group, member states 
must first belong to the IMF (q.v.). 



272 



Index 



ABC Color, 160, 191, 196, 236 

Abdo Benftez, Mario, xxii, xxviii, 176 

Abrams, Elliott, 197 

Acaray hydroelectric power plant, 130 

Acepar. See Paraguayan Steel (Aceros 

Paraguayos: Acepar) 
Ache Indian tribe, 86 
Adjustment Plan (1986), 106, 108 
administrative divisions, 169 
Aforo, See export pricing (Aforo) 
Agaces Indians, 6 
agrarian reform, 72, 115 
Agrarian Reform Institute (see also Rural 

Welfare Institute (Institute de Bienestar 

Rural: IBR)), 115 
Agrarian Statute, 115 
agribusiness in Paraguay, 113-14, 115, 

189 

agricultural census of 1981, 114-15 

agricultural colonies (see also squatters): 
xxi, 76, 81-82, 99, 100, 113, 115-16, 
118-19, 123, 138, 189 

Agricultural Credit Agency (Credito 
Agricola de Habilitacion: CAH), 144 

agriculture (see also fertilizers; land use): 
crops, 118-22; economic importance 
of, 113; government policy for, 127; of 
Guaranf Indians, 100; land used for, 
116-18; percent of labor force in, 
111-12, 113; processing industry for, 
138-39; research for, 125; soil fertility, 
99; technology for, 122-25 

AID. See United States. Agency for In- 
ternational Development (AID) 

AIP. See Indigenist Association of Para- 
guay (Asociacion Indigenista del 
Paraguay: AIP) 

air bases, 228-29 

air force, xvii, 204, 213; in civil war and 
Chaco War, 228; equipment of, xviii, 
228-29 

airports, xvi, 148, 170 

Alfonsm Foulkes, Raul, 195 

Alliance for Progress, 46, 103 

Altiplano, 35 

Alto Chaco, 121 

Alto Parana Department, 72, 76, 78, 100, 
115, 116, 118, 121, 138, 222 



Amambay Department, 72, 118, 222 

Americas Watch, 180, 181 

ANDE. See National Power Company 
(Administracion Nacional de Elec- 
tricidad: ANDE) 

Andes Mountains, 5, 60 

Angaite language, 88 

Anglican Church, 89 

Antelco. See National Telecommunica- 
tions Company (Administracion Na- 
cional de Telecomunicaciones: Antelco) 

APCT. See Permanent Assembly of Land- 
less Peasants (Asamblea Permanente de 
Campesinos sin Tierra: APCT) 

Aquino, Ramon, xxiii, xxviii 

Argafia, Luis Maria, xxiii, xxvi-xxvii, 
182-83 

Argentina, 22, 24-25, 26, 27-29, 30, 31, 
38, 41; boundary with Paraguay of, 
54-55, 59; emigration to, 75-76; in- 
fluence in Paraguay of, 223, 240; in- 
vasion in 1811 by, 205; Itaipu-Corpus 
Accord, 134; military aid from, 227; 
military coup in, 44; relations of Para- 
guay with, 46, 193, 195-96, 212; trans- 
portation through territory of, 145; and 
Treaty of Yacyreta, 134; war with 
Paraguay of, 26 

armed forces (see also air force; army; con- 
scription; navy): Colorado Party as 
check on power of, 212; control by 
Stroessner of, 171; control of political 
activity by, 210; factionalism in, 
209-10, 211; history of, 205; impor- 
tance in Paraguay of, 171-72; influence 
of Brazil and Argentina on, 223; med- 
ical personnel of, 213; in national poli- 
tics, xxiv, 206; organization of, 215, 
219, 222-29; purge of, 208, 209; 
strength of, xvii-xviii; training program 
for, 222; uniforms of, 215; use of 
Guaranf language by, 222-23 

Armed Forces Officer Training School, 
222 

army (see also artillery; cavalry; Com- 
bat Support Command; engineers; 
infantry; Logistics Support Com- 
mand; officer corps; Presidential Escort 



273 



Paraguay: A Country Study 



Regiment): equipment of, 226; in- 
fluence of, 204, 206, 223; military ac- 
tions of, 223-24; organization of, 172, 
205, 224-25; role in civil war of, 208; 
training schools of, 226; use of confis- 
cated land by, 205, 218-19 
Artillery, 225 

ASCIM. See Association of Indian - 
Mennonite Cooperative Services 
(Asociacion de los Servicios de Cooper- 
ation Indigena-Menonita: ASCIM) 

Asians in Paraguay, 83-84 

assimilation, 84 

Association of Indian- Mennonite Cooper- 
ative Services (Asociacion de los Ser- 
vicios de Cooperation Indigena- 
Menonita: ASCIM), 89 

Asuncion, 5, 7, 10, 14, 15, 16, 18, 29, 
36, 42, 46, 48, 53, 57, 58, 59, 60, 61, 
62, 71, 76, 82, 103, 117, 127, 131, 140, 
142, 145; airport at, 148; capital city, 
169; population growth in, 76-78; mili- 
tary facilities in, 219, 225; port of, 
145-46 

Asuncion Navy Yard, 40 

Audiencia of Charcas, 10, 14 

Authentic Radical Liberal Party (Partido 
Liberal Radical Autentico: PLRA), 
xxvii, xxx, 47, 178, 198, 234; split in, 
183 

authoritarian government, 170, 203, 229; 

use of military to maintain, 211 
authoritarianism, 4 
Ava-Chiripa Indian tribe, 86 
Axis nations, 39 
Ayala, Eusebio, 35-36 
Ayolas, Juan de, 7 

Bahi'a Negra, 146, 227 
Bahia Negra naval base, 227 
balance-of-payments deficit. See trade 
Banco de Asuncion (Brazil), 142 
Banco do Brasil, 154 
Banco Exterior (Spain), 142 
banking system, 108, 110, 142 
Bareiro, Candido, 31 
Basic Christian Communities (Comuni- 
dades Eclesiasticas de Base: CEBs), 185 
beans, 120-21 

beef production and exports, 126-27 

Belgrano, Manuel, 17 

Bertoni Agron, Hernando, xxvi 



Biological Weapons Convention (1975), 
223 

Bishopric of Asuncion, 78 

BNF. See National Development Bank 
(Banco Nacional de Fomento: BNF) 

BNT. See National Workers' Bank (Banco 
Nacional de Trabajadores: BNT) 

Bolivia, 5, 29, 34; boundary with Para- 
guay of, 54, 206, 212; relations of 
Paraguay with, 212; role in Chaco War 
of, 35, 206-7 

Bonaparte, Joseph, 15 

Bonaparte, Napoleon, 15 

Boqueron Department, 138, 222 

Brazil, 22, 24, 27-29, 30, 31; agribusi- 
nesses in Paraguay of, 113-14, 118; 
boundary with Paraguay of, 29, 54, 55; 
contribution to Itaipu project of, 
131-33, 193; direct investment in 
Paraguay by, xvii, 154; effect of price 
control in, 127; influence in Paraguay 
of, 44, 223; Itaipu-Corpus Accord, 134; 
military coup in, 44; occupation of 
Paraguay by, 30, 206, 224; relations of 
Paraguay with, xvii, 46, 193-95, 212; 
trade with, 104; and Treaty of Itaipu, 
103, 193, 194; war with Paraguay of, 
26, 27-29 

Brazilians in Paraguay, 45, 82, 83, 115, 
189 

Buenos Aires, 6, 15, 17, 46, 59, 76, 148 
business/industry sector: as special in- 
terest group, 187-88 



Caaguazu Department, 72, 76, 82, 100, 

121, 222 
Caazapa Department, 70, 76 
Caballero, Bernadino, 31-32, 206 
Cabeza de Vaca, Alvar Nunez, 10-11 
cabildo, 17, 18 
Cabot, John, 6, 7 
Cabot, Sebastian, 6 
CAH. See Agricultural Credit Agency 

(Credito Agricola de Habilitacion: CAH) 
Calera Cue, 146 
Cambios Guarani, xxvi 
Campo Grande, 225 
Campo Via, 35 
Candelaria, 7 

Canendiyu Department, 72, 100, 115, 
118, 222 



274 



Index 



capital inflows, 153 
Cario tribe, 10 
Carter, Jimmy, 47, 196 
Casado, 146 

Castro Ruz, Fidel, xxiii, 43, 192 
Catholic Action (Accion Catolica), 79 
Catholic Relief Service, 184 
Catholic University of Our Lady of Asun- 
cion, 79, 90, 182, 190 
cavalry, 224-25 

CEBs. See Basic Christian Communities 
(Comunidades Eclesiasticas de Base: 
CEBs) 

cement industry, 140-41 

census, 61, 114-15 

Central Bank (Banco Central), xxxi, 108, 
110, 125; role in lending of, 144 

Central Electoral Board, 170, 179; 
Colorado Party domination of, 177 

Central Hill Belt, 55, 56, 57, 58 

Central Lowland, 55, 56, 57 

CEP. See Paraguayan Bishops' Confer- 
ence (Conferencia Episcopal Para- 
guaya: CEP) 

Cerro Cora, 36, 38 

Cerro de San Joaquin, 57 

the Chaco (see also Estero Patifio): xiii, xiv, 
5,7,10,11,24, 29,34,35,54,58,61, 
62, 82, 85, 87, 89, 114, 115, 116-17, 
123, 126, 129, 131, 138, 207, 212; 
incentives to develop, 147 

Chaco i, 227 

Chaco Indian tribes, 10, 11, 18, 86-87 
the Chaco War (see also Bolivia): 35-38, 

40, 42, 84, 86-87, 90, 102, 171-72, 

203, 206-7, 224, 227 
Chapultepec, Act of (1945), 223 
Charles III, 14 
Charles V, 6, 7, 10 
Charrua tribe, 7 
Chaves, Federico, 40-41, 179 
Chaves, Juan Ramon, xxii, xxvi-xxvii, 

175, 177, 182 
Chile, 34, 198 
China, 192 

Chinese in Paraguay, 83-84 
Christian Agrarian Leagues, 79, 184 
Christian Democratic Party (Partido 

Democrata Cristiano: PDC), xxvii, 44, 

47, 178-79, 198, 234 
Christian Workers' Center, 184 
church- state relations, 79-80 
Citibank (United States), 142 



citrus fruits, 122 
civil war (1922), 33, 224, 228 
civil war (1947), 39-40, 208, 224 
Clat. See Latin American Central Organi- 
zation of Workers (Central Latino- 
americana de Trabaj adores: Clat) 
climate, xiv, 59-61 

Clinical Hospital of the National Univer- 
sity, 92 
clothing industry, 139-40 
coast guard, 228 
Code of Penal Procedure, 240 
coffee, 119 

colonization. See agricultural colonies 
Colorado Party (see also Lopiztas): 5, 30, 
31-34, 39-41, 43, 44, 48, 69, 159-60, 
168, 171, 173,206; as check on power 
of armed forces, 212; control by mili- 
tants of, xxii, 204; factionalism in, 
174-77, 208, 210, 211-12; as instru- 
ment of Stroessner power, 173-74; 
militants and traditionalists in, xvii, 
xxii, 174-76, 182-83; National Com- 
mittee of, xxii, xxvii, 174, 176, 190; 
under Rodriguez, xxvii, xxix, xxx; 
vigilante groups of, 234 
Colorado Popular Movement (Movi- 
miento Popular Colorado: Mopoco), 
xxvii, 44, 47, 178-79, 233-34 
Combat Support Command, 225 
Combined Technical Commission for 
the Development of the Rio Parana, 
135 

Command and Staff School, 222 

communications system, 149 

communists in Paraguay, 40, 208 

Comunero Revolt, 14 

Concepcion, 58, 146, 186 

Concepcion Department, 222, 225 

concordat, 165 

conscription, 213-14 

Constitutional Government Regulations 
(1813), 160-61 

constitution of 1844, 161 

constitution of 1870, 161 

constitution of 1940, 38, 40, 161-62 

Constitution of 1967, xvi, xxvii, 44, 64, 
78, 160, 162-68, 170; amendment to, 
163; guarantees for citizens in, 241, 
242; provisions for National Congress, 
164, 166; state-of-siege provision in, 
164-65 

construction industry, 140-41 



275 



Paraguay: A Country Study 



Coordinating Committees of Agricultural 
Producers (Comites de Coordination 
de Productores Agricolas), 189-90 

Copetrol, 135 

Cordillera de Amambay, 57, 58 
Cordillera de Caaguazu, 57, 58 
Cordillera de Mbaracayu, 57, 58 
Cordillera Department, 70, 76 
corn, 120-21 

Corposana. See Sanitary Works Corpora- 
tion (Corporation de Obras Sanitarias: 
Corposana) 

Corpus hydroelectric power plant (pro- 
posed), 46, 134-35 

Corrientes, 28 

corruption in government, xxviii, xxxi, 
236 

cotton, 99, 103-4, 113, 117-19, 150 
Council of State, xvi, xxvii, xxviii, 164, 
165 

court system, xvi, 241-43 

CPT. See Paraguayan Confederation of 

Workers (Confederation Paraguaya de 

Trabajadores: CPT) 
credit: for agricultural production, 125; 

from United States and World Bank, 

144 

crime, 236-38 

criminal justice system (see also Code of 
Penal Procedure; court system; justice 
of the peace; Military Penal Code; 
penal code): 204-5, 239-42 

Cuba: aid from, 43; support to Para- 
guayan radicals from, 192 

currency, xv, 108 

Curuguaty, 225 

Davis, Arthur, 196 

Diaz Delmas, Mauricio Bartolome, xxvi 
debt, external, xxxi, 154-55, 160 
defense budget. See spending 
deforestation, 129 

democracy, Paraguayan style, 160, 
170-71 

Democratic Center (Centro Democra- 
tico), 32 

Department of Agriculture and Forestry 
Research, 125 

departments, xvi-xvii, 169 

dictatorship, 4, 205; of Francia, 20-22; 
of Carlos Antonio Lopez, 22-25; of 
Francisco Solano Lopez, 25-27 



Directorate of Military Industries, 218 
Dirty War, 195 

diseases, 94-95; degenerative, 63 
Dominican Republic: United States inter- 
vention in, 46 
drainage, 58-59 
drought, 105, 113 
drug trade, 197, 237 

Eastern Paraguay (Paraguay Oriental), 
53, 54, 63, 82, 85, 104, 115, 116, 126 

EC LA. See United Nations Economic 
Commission for Latin America 
(ECLA) 

ECLAC. See United Nations Economic 
Commission for Latin America and the 
Caribbean (ECLAC) 

economic assistance: from Brazil, 44-45; 
from Japan and West Germany, 155; 
from United States, 38, 44, 155; from 
World Bank, 155 

economic growth, xxi, 53-54, 78, 99-100, 
103-5, 154; downturn in, 160 

economic planning (see also National Eco- 
nomic Plan): 103 

economic policy (see also exchange rate 
policy; export policy (Aforo); fiscal pol- 
icy): of government, 99; of Stroessner 
administration, 102 

economic potential, 100, 116 

economic stabilization, 102 

education, primary and secondary (see 
also health education and training; 
Higher Institute of Education; literacy 
rate; schools): in colonial era, 89-90; 
public, xiv, 90-91; rural, 92 

EEC. See European Economic Commu- 
nity (EEC) 

Egusquiza, Juan B., 32 

elections, 43, 160, 165, 171, 178, 180-82; 
fraud in, xxii, xxx; presidential and 
congressional, xvii, xxvii, xxix-xxx 

Electoral Statute. See Central Electoral 
Board; Law 886 (December 11, 1981) 

electoral system (see also Central Electoral 
Board): 169, 179-80 

electricity, 130-35 

El Pueblo, xxviii, 160, 180 

Emboscada, 243 

emigration, 53, 63; to Argentina, 75-76 
Encarnacion, 42, 59, 60, 81, 127, 146, 
148 



276 



Index 



energy sector, xv, 129-30; renewable 
resources in, 136 

engineers (army), 225 

English, Adrian J., 172 

environmental health, 93-94 

Espmola y Pena, Jose, 17 

Esso Standard (Exxon), 135 

Estero Patino, 58, 59 

Estigarribia, Jose Felix, 35-36, 37-38, 
161, 170 

ethanol, 119-20, 130, 136 

ethnic groups, xiv, 63-64, 80-81; immi- 
grants, 81-84; Indians, 84-89 

European Economic Community (EEC), 
127, 151 

Europeans as immigrants, 81 

exchange rate, xv, 110-11 

exchange- rate policy {see also export 
pricing (Aforo)): devaluation under, 
110-11; for export of electricity, 
134; Rodriguez changes for, xxx- 
xxxi 

executive power. See presidential power 

export crops, 118-20 

export pricing (Aforo): for agricultural 

commodities, 110-11, 126-27, 152 
export promotion policy, 152 
exports {see also export crops): xv, 99, 104, 

118-20, 126-29, 150; of electricity, 

130; markets for, 151-52 
Ezcurra, Juan Antonio, 32 



family: importance in society of, 53, 

65-68 
family planning, 63 
farming technology. See agriculture 
Febrerista Revolutionary Party (Partido 

Revolucionario Febrerista: PRF), 

xxvii, 36-40, 43, 44, 47, 178, 180, 183; 

as opposition to Colorado Party, 178, 

207-8 

FED. See Special Development Fund 
(Fondo Especial de Desarrollo: FED) 

Federation of University Students of 
Paraguay (Federacion de Estudiantes 
Universitarios del Paraguay: FEUP), 
190 

Ferdinand VII (king of Spain), 15, 16 
Fernandez de la Torre, Pedro, 11 
Fernheim Colony, 82 
Ferreira, Benigno, 31, 32, 33 



Ferreira Ibarra, Carlos, 182 
fertilizers, 124, 140 

FEUP. See Federation of University Stu- 
dents of Paraguay (Federacion de 
Estudiantes Universitarios del Para- 
guay: FEUP) 

FG. See Livestock Fund (Fondo Gana- 
dero: FG) 

Filadelfia, 82, 127-28 

finance for development, 143-44 

financial services industry: commercial 
banking as part of, 142; nonbanking 
institutions in, 143 

fiscal policy, government {see also reve- 
nues, government): xvi, xxxi, 100, 
105-8; incentives under, 138 

fiscal year, xv 

fishing, 129 

Flomeres. See Merchant Marine (Flota 
Mercante del Estado: Flomeres) 

floods, 55, 58, 59, 94, 113 

Fondo Ganadero (FG), 144 

food crops, 120-22 

Food for Peace program, 155 

foreign assistance, 155 

Foreign Assistance Act of 1961, 197 

foreign direct investment, 153-54 

foreign investors: as landholders, 101, 
113, "138 

Foreign Military Sales program, 223 
forest products {see also lumber; timber): 

128, 139 
forests, 128-29 

Fortfn Teniente Primero Stroessner, 225 
Fortm Vanguardia, 34 
France: financing for cement industry by, 
141 

Francia, Jose Gaspar Rodriguez de, xvii, 
3-4, 17, 79, 101, 161, 170; regime of, 
17-22, 24, 205 

Franciscans, 78 

Francisco Lopez Military College, 42, 

214, 222, 226 
Franco, Rafael, 34, 36, 37, 40, 207 
freedom of expression: limits under Law 

209 of, 230 
French Revolution, 15, 20 
Friedrich Naumann Foundation, 182 
Friendship Bridge, 146, 193 
Fuerte Olimpo, 7 

FUP. See University Federation of 
Paraguay (Federacion Universitaria del 
Paraguay: FUP) 



277 



Paraguay: A Country Study 



Garcia, Aleixo, 5-6 
General Directorate of Penal Institutions, 
243 

General Directorate of Statistics and Cen- 
sus, 61 

Generalized System of Preferences, 198 
General Office of Statistics, 61 
geography, xiii, 54-61 
German language, 82 
Germany, 34; influence in Paraguay of, 
38, 39 

Germany, West: direct investment in Para- 
guay by, 154; economic assistance from, 
155 

Godoy Jimenez, Adan, xxii, xxviii, 175, 
176 

godparenthood (compadrazgo), 68-69 

gold peso, 108 

Gondra, Manuel, 33 

Gonzalez, Juan G., 32 

Gonzalez, Natahcio, 40-42 

government: branches of, xvi-xvii, 
163-69; changes in limited role of, 107, 
138; constitutional development, 
160-63; power of central, 170; role in 
financial services industry of, 144; sur- 
veillance and repression activity of, 
232-35 

government, local. See administrative 
divisions; departments; municipalities 

gross domestic product (GDP), xiv-xv, 
xxi, xxii, 99, 104-5, 106-7, 113, 114, 
130, 137, 140, 142, 149-50, 154 

Group of Nine trade unions, 189 

Group of Thirty-four. See Movement for 
Colorado Integration (Movimiento de 
Integration Colorado: MIC) 

Guaira Falls (see also Salto del Guaira): 70, 
131 

Guana language, 88 
Guarajo tribe, 10 

guaram (currency), xv, xxx-xxxi, 108, 
110 

Guaram' Indians, 6, 10-14, 84, 100, 121 
Guaram language, 3, 5, 53, 63-65, 85, 

87-88, 92, 222 
Guayacuru tribe, 12 
guerrilla activity, 210 
Guion Rojo, 39, 40 
Guyana Highlands, 10 

harbor police, 228 



Hayes, Rutherford B., 30 
health education and training, 93 
health services (see also environmental 

health): xiv, 92-93 
Hernandarias, 78 
Herrera, Nicolas de, 19 
Higher Institute of Education, 91 
Hitler, Adolf, 39 

homogeneity of population, 80, 236 
housing, 94, 140 
Howe, James, 88 
Huayna Capac, 6 

human rights in Paraguay, xxiii, 47, 48, 
185, 191, 192, 196, 197, 229-31 

hydroelectric power projects (see also Com- 
bined Technical Commission for the 
Development of the Rio Parana; Cor- 
pus hydroelectric power plant; electric- 
ity; Itaipu hydroelectric power plant; 
Yacyreta hydroelectric power plant): 5, 
44-46, 62, 100, 129-35, 138 



IBR. See Rural Welfare Institute (Insti- 
tuto de Bienestar Rural: IBR) 

IDB. See Inter- American Development 
Bank (IDB) 

Iguazu Falls, 5 

ILO . See International Labour Organisa- 
tion (ILO) 

immigrants and immigration, 54, 81-84, 
101, 115, 189 

imports, xv, 149-50; origination of, 
150-51; policy for, 150; substitution 
policy for, 138, 150 

INC . See National Cement Industry (In- 
dustria Nacional de Cemento: INC) 

Inca Empire, 5 

Income Tax Bureau, 107 

independence, 3, 17, 18, 22, 25, 30, 101, 
160, 223 

Indi. See Paraguayan Indian Institute (In- 
stitute Paraguay o del Indigena: Indi) 

Indians (see also Guaram Indians): 84-89; 
in the Chaco and Eastern Paraguay, 85, 
86; effect of resettlement on, 86; in mis- 
sionary setdements (reducciones), 88, 
100-101; organizations protecting 
rights of, 89; population of, 85; tribes 
of, 86-87 

Indigenist Association of Paraguay 
(Asociacion Indigenista del Paraguaya: 
AIP), 89 



278 



Index 



industrial policy (see also exchange-rate pol- 
icy; fiscal policy): Law 550 (Law 550/ 
75), 104; import substitution in, 138 

industry (see also construction; manufac- 
turing): xv, 136-41 

infant mortality rate (IMR), 94-95 

infantry, 224-25 

inflation, 108, 110 

inland waterways, 58, 145-46 

Inter-American Commission on Human 
Rights, 48, 192 

Inter-American Defense Board, 223 

Inter-American Defense College, 223 

Inter-American Development Bank 
(IDB), xvii, 103, 108; assistance from, 
155 

Inter- American Foundation, 155 
Inter- American Treaty of Reciprocal As- 
sistance of 1947 (Rio Treaty), xvii, 192, 
223 

intermarriage, 20, 63 

International Confederation of Free 

Trade Unions, 189 
International Labour Organisation 

(ILO), 188 
International Military Education and 

Training program, 223 
International Monetary Fund (IMF), 

xvii, 108, 155; stabilization program of, 

102 

Inter-Union Workers Movement (Movi- 
miento Intersindical de Trabaj adores: 
MIT), 189 

Investment Promotion Law for Social and 
Economic Development. See Law 550 
(Law 550/75) 

IPS. See Social Insurance Institute (Insti- 
tuto de Prevision Social: IPS) 

IPVU. See Paraguayan Institute for Hous- 
ing and Urban Development (Instituto 
Paraguayo de Urbanizacion y Vivi- 
enda: IPVU) 

Irala, Domingo Martinez de, 7, 10, 11 

Itaipii Binacional, 131 

Itaipu-Corpus Accord, 134 

Itaipu hydroelectric power plant, xxi, 
xxii, 5, 45-46, 72, 78, 99, 104, 112, 
130, 131-33, 153, 189 

Italy: agribusinesses in Paraguay of, 118 

Itapua Department, 82, 116, 118, 121 

Itatine tribe, 10 

ItatMta-Cora hydroelectric power project 
(proposed), 135 



Jacquet, Jose Eugenio, xxii, xxviii, 176 
Japan: economic assistance from, 155; 

financing for airport, 148 
Japanese as minority group, 81-82 
Jara, Albino, 33 
Jesuits, 11-14, 78, 84, 100, 113 
John Paul II, 186-87 
Johnson, Lyndon B., 47 
judiciary, 168, 204-5, 241 
justice of the peace, 242 

Kennedy, John F., 46, 178 
kinship, ritual, 68-69 
Koreans in Paraguay, 83-84 

Labor Authority, 112 

labor force: distribution of, 111-12, 137; 

as special interest group, 188-90, 234 
labor laws, 112 
labor unions, 188-90, 234 
Lamo, Domingo, xxviii, xxix, xxx, 

47-48, 180-81, 183, 194, 195, 196 
lakes, 57 

land colonization. See agricultural colonies 
land competition, 100, 104, 115, 123-24, 
189 

landholders (see also landlessness): 53, 
113-16 

landlessness, 115, 189 

land ownership, 70, 101 

land reform, 53, 72, 115-17 

land sales, 101, 113 

land tenure. See landlessness; land owner- 
ship; reducciones; squatters 

land use, 116-18 

languages (see also Guar am language): xiv, 

3, 5, 45, 53, 82, 88; Indian, 85, 87-88 
LAP. See Paraguayan Airlines (Lmeas 

Aereas Paraguaya: LAP) 
Latin American Central Organization of 

Workers (Central Latinoamericana de 

Trabaj adores: Clat), 189 
Latin American Integration Association, 

xvii, 192 

Law 209 (September 18, 1970), xxxi, 165, 
180, 230 

Law 550 (Law 550/75), 104, 138, 150 
Law 886 (December 11, 1981): Electoral 

Statute, 169, 179, 180 
Law for the Defense of Democracy (Octo- 
ber 17, 1955), 165, 180 



279 



Paraguay: A Country Study 



Law of the Free Womb (1842), 24 

leather industry, 139-40 

Legionnaires, 30-31 

legislature. See National Congress 

lending. See credit 

Lend-Lease Agreement, 38 

Lewis, Paul, 77 

Liberal Party (Partido Liberal: PL) (see 
also Renovation Movement): 4, 44, 
102, 173; as opposition to Colorado 
Party, 178, 206 

Liberal revolt, 224 

Liberals (see also New Liberals): 30-38, 40 
Liceo Militar, 222 
life expectancy, xiv, 94 
Lima, 7 

literacy rate, xiv, 92 

Livestock Fund (Fondo Ganadero: FG), 
125, 127, 144 

livestock production, 125-28 

Logistics Support Command, 225-26 

Lopez, Carlos Antonio, 4, 161, 170; re- 
gime of, 22-25; use of army under re- 
gime of, 205, 223 

Lopez, Francisco Solano, 3, 4, 36, 79, 
170; regime of, 25-27, 205-6; role in 
War of the Triple Alliance of, 27-29, 30 

Lopiztas, 30-31, 40 

lumber, 128-29, 139 

Lynch, Elisa Alicia, 25-26 

Mac'a language, 88 

Machuca Vargas, Orlando, xxiv, xxvi, 
xxviii 

mamelucos, 12, 13 

manioc (cassava), 120, 121 

manufacturing industry: factors con- 
tributing to lack of growth in, 137-38; 
growth of, 138; size and variety of com- 
panies in, 138-39 

Maricevich Fleitas, Ambal, xxiii, 184, 186 

marijuana, 122, 238 

marine battalion, 227 

Mariscal Estigarribia airport, 148 

Mariscal Estigarribia, 222, 225 

Mascoi-Toba Indians, 87; language, 88 

Mato Grosso (Brazil), 145 

Maybury-Lewis, David, 88 

Mayor Pablo Lagarenza, 225 

MCP. See Paraguayan Peasant Move- 
ment (Movimiento Campesino Para- 
guayo: MCP) 



MDP. See Popular Democratic Movement 
(Movimiento Democratico Popular: 
MDP) 

media, 191-92; control by government of, 
235 

Mena Porta, Anibal, 79 

Mendez Fleitas, Epifanio, xxiv, 41, 42, 44 

Mendoza, Gonzalo de, 7 

Mendoza, Pedro de, 6, 7 

Menem, Carlos, 196 

Menendez-Carrion, Amparo, 170 

Menno Colony, 82 

Mennonite religion, 78, 89 

Mennonites: as immigrants and coloni- 
zers, 78, 82, 87, 89, 117, 123 

Merchant Marine (Flota Mercante del 
Estado: Flomeres), 146 

mestizo society, 84 

metalworking industry, 141 

MIC. See Movement for Colorado Inte- 
gration (Movimiento de Integracion 
Colorado: MIC) 

Middle Easterners as minority group, 81 

migration (see also emigration; immigra- 
tion): 53-54, 75; to Asuncion, 77-78; 
of Brazilians into Paraguay, 45 

militants in Colorado Party, xxii-xxiv, 
174-77 

Military Air Transport (Transporte Aereo 

Militar), 148 
military equipment, xviii, 218, 223, 224, 

226 

military establishment, 203, 207; 

dominance in domestic society of, 210 
Military Health Service, 92 
military heroes as political leaders, 207-8, 

211 

Military Instruction Center for Reserve 
Officer Training, 222 

Military Penal Code, 240 

military regions, 219, 222 

military reserve. See National Guard; Ter- 
ritorial Guard 

milk production, 127-28 

Ministry of Agriculture and Livestock, 
116, 125; Extension Service (Servicio de 
Extension Agricola y Ganadera: SEAG), 
124; National Forestry Service of, 129 

Ministry of Education and Worship, 90, 
92 

Ministry of Justice and Labor, 241, 243 
Ministry of National Defense, 203, 219, 
222 



280 



Index 



Ministry of Public Health and Social Wel- 
fare, 63, 92 

Ministry of Public Works and Commu- 
nications, 131, 135, 146, 147 

minority groups, 80-84 

Misiones Department, 222 

missionary activity, 88-89 

MIT. See Inter-Union Workers Move- 
ment (Movimiento Intersindical de 
Trabajadores: MIT) 

Molas Lopez, Felipe, 41, 42 

monetary policy {see also exchange-rate 
policy): 108, 110 

Montanaro, Sabino Augusto, xxii, xxviii, 
176-77, 182 

Mopoco. See Colorado Popular Move- 
ment (Movimiento Popular Colorado: 
Mopoco) 

Mormigo, Hinigio, 38-41, 42, 170, 208 
mortality rate, 94 

Movement for Colorado Integration 
(Movimiento de Integration Colorado: 
MIC), xxvi, 176 

multilateral development banks. See Inter- 
American Development Bank (IDB); 
World Bank 

municipalities, 169 



narcotics trade. See drug trade 

National Accord (Acuerdo Nacional), 
xxvii-xxviii, xxix-xxx, 48, 160, 179— 
80, 181, 234; position on opposition to 
Stroessner government, 185 

National and Popular Movement (Movi- 
miento Nacional y Popular), 176, 177 

National Bank of Savings and Loans for 
Housing (Banco Nacional de Ahorro y 
Prestamo para la Vivienda), 144 

National Cement Industry (Industria Na- 
cional de Cemento: INC), xxxi, 141, 
183 

National Commission on Fuel Alcohols, 
136 

National Congress, xvi, xxx, 164-65; 

functions of, 166-67; Senate and 

Chamber of Deputies in, 165-66 
National Coordinating Committee for 

Free Elections, 181 
National Development Bank (Banco 

Nacional de Fomento: BNF), 125, 144 
National Economic Plan of 1965, 103, 152 
National Ethanol Plan, 136 



National Forestry Service. See Ministry of 
Agriculture and Livestock 

National Guard, 214 

National Independent League (Liga Na- 
cional Independiente), 35 

National Penitentiary, 243 

national police (see also Security Guard): 
control by Stroessner of, 171, 205; 
organization of, 238-39; training of, 
238 

National Port Authority, 146 

National Power Company (Administra- 
tion Nacional de Electricidad: ANDE), 
131, 133 

National Republican Association- 
Colorado Party (Asociacion Nacional 
Republicana-Partido Colorado) See 
Colorado Party 

National Service for Environmental Sani- 
tation (Servicio Nacional de Sanitaria 
Ambiental: Senasa), 93-94 

National System of Savings and Loans for 
Housing (Sistema Nacional de Ahorro 
y Prestamo para la Vivienda: SNAPV), 
144 

National Telecommunications Company 
(Administration Nacional de Tele- 
comunicaciones: Antelco), 149 

National Transport Airlines (Lineas 
Aereas de Transporte Nacional), 
148 

National University, 90, 190, 193; Clin- 
ical Hospital of, 92 

National War College, 219, 222 

National Workers' Bank (Banco Nacional 
de Trabajadores: BNT), 142 

naval bases, 227 

navy (see also coast guard; harbor police; 

marine battalion): 204, 205, 208, 213; 

equipment and vessels of, 227; role in 

Chaco War of, 227; in War of Triple 

Alliance, 226 
Nazi Party, 39 
Neembucu Department, 222 
Neembucu Plain, 55, 57, 59 
Neuland Colony, 82 
New Liberals, 38, 43 
Nicaragua, 48; termination of relations 

with, 192 
Nixon, Richard M., 46 
Northern Upland, 55, 56, 57 
Nueva Asuncion, 138 
Nu Guazu, xxi, 229 



281 



Paraguay: A Country Study 



OAS. See Organization of American 
States (OAS) 

officer corps, 172-73, 211; army training 
for, 222; importance of, 214-15; insig- 
nia of, 215 

oil (see also refineries): discovery of, 34; 
exploration and production of, 130, 
135-36; imports of, 135; transport of, 
135 

oilseeds, 120, 121 

OPM. See Political- Miltary Organization 

(Organization Polftico-Militar: OPM) 
opposition activity, 177-80, 229-36; 

government limit to, 230-32; illegal 

groups of, 232-34 
Organization of American States (OAS), 

xvii, 46, 48, 103, 192, 223 

Pact of Pilcomayo, 32 

Paiu-Tavyterau Indian tribe, 86 

Palacio, Manuel Antonio, 79 

pampero wind, 60 

paper industry, 139 

Paraguari Department, 70, 76, 121 

Paraguayan Airlines (Lmeas Aereas 
Paraguayas: LAP), 148 

Paraguayan Bishops' Conference (Con- 
ferencia Episcopal Paraguay a: CEP), 
184, 185, 186 

Paraguayan Communist Party (Partido 
Comunista Paraguayo: PCP), xxvii, 
44, 180, 232-33 

Paraguayan Communist Party — Marxist- 
Leninist (Partido Comunista Para- 
guayo — Marxista-Leninista), 233 

Paraguayan Confederation of Workers 
(Confederation Paraguaya de Trabaja- 
dores: CPT), 112, 188-89, 234 

Paraguayan Indian Institute (Instituto 
Paraguayo del Indigena: Indi), 85 

Paraguayan Institute for Housing and 
Urban Development (Instituto 
Paraguayo de Urbanization y Vivi- 
enda: IPVU), 144 

Paraguayan Legion, 30 

Paraguayan Peasant Movement (Movi- 
miento Campesino Paraguayo: MCP), 
190 

Paraguayan Petroleum (Petroleos 

Paraguayos: Petropar), 135 
Paraguayan Refinery (Refinerfa 

Paraguaya), 135 



Paraguayan Steel (Aceros Paraguayos: 

Acepar), xxxi, 141, 194 
Paraguay as buffer state, 192 
Paraguay as Spanish colony, 7, 10-17, 

63, 100 

Paraguay Ethanol Agency, 136 

Paraguay Occidental. See Western Para- 
guay (Paraguay Occidental) 

Paraguay Oriental. See Eastern Paraguay 
(Paraguay Oriental) 

Paraguay Shell, 135 

paramilitary group, 39 

Paranagua, 193 

Parana Plateau, 55, 56, 57, 58, 61 
Paranefia Region, xiii, xiv, 54, 55, 58, 

59-61 
Patria, 173 
patron, 31, 70-71 
patron-peon relationship, 70-71 
Paulistas. See mamelucos 
Pavia, Felix, 37 

PCP. See Paraguayan Communist Party 
(Partido Comunista Paraguayo: PCP) 

PDC. See Christian Democratic Party 
(Partido Democrata Cristiano: PDC) 

Peace Corps, 155, 197 

peanuts, 120-21 

Pearl Harbor, 39 

Penal Code, 240 

peon, 70-71 

Permanent Assembly of Landless 
Peasants (Asamblea Permanente de 
Campesinos sin Tierra: APCT), 190 

Permanent Commission of Relatives of 
the Disappeared and Murdered, 190 

Peron, Juan Domingo, 41, 42, 43, 46, 
102, 159, 196 

Peru, 11 

petit-grain oil, 120 
petroleum. See oil 

Petropar. See Paraguayan Petroleum 
(Petroleos Paraguayos: Petropar) 

Philip III (emperor of Spain), 12 

Pinochet Ugarte, Augusto, 198 

Pizarro, Francisco, 5 

PL. See Liberal Party (Partido Liberal: 
PL) 

plastics industry, 140 

PLR. See Radical Liberal Party (Partido 

Liberal Radical: PLR) 
PLRA. See Authentic Radical Liberal 

Party (Partido Liberal Radical Auten- 

tico: PLRA) 



282 



Index 



police force. See national police 

Political- Military Organization (Organi- 
zacion Polftico-Militar: OPM), 233 

political parties: Colorados and Liberals 
in Paraguay, 30; Colorado Party, 173- 
7; opposition to Colorado Party, 
177-80, 232-34 

political stability: under Stroessner re- 
gime, xxi 

Popular Democratic Movement (Movi- 
miento Democratico Popular: MDP), 
180, 181, 198 

population, xiv, 61-63 

ports, xvi, 58, 134, 145-46 

Portugal, 12 

Portuguese language, 45, 83 

Posadas, 148 

poultry industry, 128 

President Alfredo Stroessner International 

Airport, 170 
President Carlos Antonio Lopez Rail 

Line, 147 
Presidente Hayes Department, 222 
Presidential Escort Regiment, xxi, 212, 

219, 224 

presidential power, 163-65, 170; control 

of legislature, 167-68 
PRF. See Febrerista Revolutionary Party 

(Partido Revolucionario Febrerista: 

PRF) 

Prieto Yegras, Leandro, 176 
prison system {see also General Directorate 
of Penal Institutions; National Peniten- 
tiary; Tacumbu Penitentiary; Women's 
Correctional Institute): 243-44 
privatization plan, xxxi 
public health. See health services 
Puerto Presidente Stroessner, xxi, 78, 
103, 104, 127, 146, 170, 194; airport 
construction at, 148; military head- 
quarters at, 222; naval base, 227 
Puerto Sanjonia naval base, 227 

quebracho, 128 
Querandi tribe, 6, 7 

Radical Civic Union (Union Civica Rad- 
ical: UCR), 195 

Radical Liberal Party (Partido Liberal 
Radical: PLR), 44, 47; as opposition 
to Colorado Party, 178 

Radio Caritas, 160, 185, 191 



Radio Nanduti, xxviii, 160, 191-92, 196 

railroad, xvi, 147-48 

Reagan administration, 196, 197, 198 

reducciones, 12, 13, 14, 78, 84, 100 

refineries, oil, 135 

religion, xiv, 78-80; freedom of, 78 

Renovation Movement (Movimiento 

Renovacion), 44, 178 
Resck, Luis Alfonso, 183 
resettlement (see also agricultural colonies): 

76, 83, 86 
revenues, government, 100, 107-8 
Revolutionary National Union (Union 

Nacional Revolucionaria), 37 
rice, 121 

right of ecclesiastical patronage, 165 
Rio (River) Apa, 54, 56, 58 
Rio (River) Aquidaban, 56, 58 
Rio de la Plata Estuary, 5, 6, 15, 19, 59, 
145, 195 

Rio de la Plata Province, 7, 10, 12, 15 
Rio (River) Paraguay, xiii, 6, 7, 34, 54, 

55, 56, 57, 58, 59, 145 
Rio (River) Parana, 5, 6, 12, 13, 45, 54, 

55, 57, 58, 59, 100, 131, 132, 134, 

145-46 

Rio (River) Pilcomayo, 30, 55, 59 

Rio (River) de Solfs, 5, 6 

Rio (River) Tebicuary, 57, 58 

Rio Treaty. See Inter- American Treaty of 

Reciprocal Assistance 
Rio (River) Uruguay, 10, 14 
Rio (River) Verde, 30 
rivers, 58-59 

roads, xvi, xxi, 100, 103, 146-47 

Rodriguez, Andres: xxix, xxx; electoral 
results for, xxix-xxxi; leader of coup 
against Stroessner, xvii, xxi; rise to 
power and government of, xxiv-xxvii, 
xxx-xxxi 

Roett, Riordan, 170 

Rolon Silvero, Ismael, xxiii, xxviii, 184, 
186 

Roman Catholic Church, 11, 21, 48, 
79-80, 160, 192; formation of peasant 
special interest groups, 190; as oppo- 
nent to Stroessner regime, xxiii, 185, 
198, 235; repression by Stroessner 
government of, 184, 186; role in 
government of, 165, 171; as special in- 
terest group, 184-87 

Roman Catholic religion {see also Francis- 
cans; Jesuits): 78-80, 88-89 



283 



Paraguay: A Country Study 



Romero Arza, Carlos, 175, 176 

Romero Espinola, Regis Anfbal, xxvi 

Rosas, Juan Manuel, 22, 24-25 

Rubin, Humberto, xxviii, 192 

Rubin, Joan, 65 

rural electrification, 131 

rural society. 70-74; effect of economic 

growth on, 104, 113; reducciones in, 113 
Rural Welfare Institute (Instituto de 

Bienestar Rural: IBR), 72, 76, 83, 86, 

115-16, 183, 189 
Ruiz de Montoya, Antonio, 13 

Saguier, Hermes Rafael, 181, 195 
Saguier, Miguel Abdon, 183 
Sajoma, 146 

Salazar, Juan de Espinosa de, 7 
Salto del Guaira (see also Guaira Falls): 57, 
59 

San Antonio, 146 

Sanitary Works Corporation (Corpora- 
tion de Obras Sanitarias: Corposana), 
93 

San Juan Bautista, 222, 225 

San Pedro Department, 82, 222 

Santa Cruz, 7 

Schaerer, Eduardo, 33 

schools, primary and secondary, 90-92 

seasons, 60 

security, internal (see also state-of-siege 
provisions): 203, 204, 210, 232-36; 
legislation to ensure, 230 

Security Guard, 239 

Senasa. See National Service for Environ- 
mental Sanitation (Servicio Nacional de 
Sanitaria Ambiental: Senasa) 

Sendero, 185, 191, 236 

Serrama de Mbaracayu, 58 

Service, Elman, 71 

Service, Helen, 71 

service sector (see also financial services): 

xv, 142-49 
shipping, 146 
shipyards, 141 
shoe industry, 139-40 
Sinforiano Bogaron, Juan, 79 
sirocco wind, 60 
slavery, 24 

smuggling operations (see also drug trade): 
104, 137, 150-51, 173, 194-95, 236-37 

SNAPV. See National System of Savings 
and Loans for Housing (Sistema Na- 



cional de Ahorro y Prestamo para la 

Vivienda: SNAPV) 
Social Insurance Institute (Instituto de 

Prevision Social: IPS), 92, 95, 144 
social security system, 95 
Society of Jesus. See Jesuits 
soil fertility, 123-24 
Solis, Juan Diaz de, 5 
Somoza Debayle, Anastasio, 48, 49, 192 
sorghum, 121 
South Africa, 192 
Southern Cone, 101, 108 
soybeans, 99, 103-4, 113, 117-18, 150 
Spain, 7, 12, 15; conquest by, 3 
Spanish language, 53, 65, 87-88 
Spanish subjugation: of Guarani Indians, 

11, 84 

Special Development Fund (Fondo Espe- 
cial de Desarrollo: FED), 144 
special interest groups, 184-92 
spending, defense, 203, 218 
spending, government, 105-7 
squatters, 72, 115, 189, 234-35 
Standard Oil Company, 34 
state-of-siege: lapse of, 230, 231 
state-of-siege provisions, 204, 230 
state-owned enterprises, xxxi, 104, 106, 

138, 141, 154 
steel production, 141 
STP. See Technical Planning Secretariat 
(Secretaria Tecnica de Planificacion: 
STP) 

Stroessner Mattiauda, Alfredo (see also 
Stronato): 4-5, 40, 41-44, 46, 102; 
armed forces as source of support for, 
171-73, 203, 211; attains power by coup 
in 1954, 41-42, 171, 208; authoritarian 
administration of, 42-49, 138, 159-60, 
162, 170, 204, 229, 232-36; command 
of military affairs by, 172, 212, 219; con- 
trol of Colorado Party by, xvii, 168, 171, 
174-77; corruption in regime of, xxxi; 
coup against, xvii; foreign policy of re- 
gime of, xvii, 192; move to stop 
Rodriguez, xxiv, xxvi; opponents to re- 
gime of, 185, 204, 210, 230 

Stroessner Mora, Gustavo, xxii 

Stronato, xxii, xxiv, xxxi, 4, 42, 170 

Stronistas, 174 

students, as special interest group, 190, 
234 

sugarcane, 119-20 



284 



Index 



Supreme Court of Justice, xvi, 163, 166, 

204-5, 241; functions of, 168 
sweet potatoes, 121 
swine industry, 128 

Tacumbu Penitentiary, 243 
Taiwan, 192 
tannin, 101-2, 128 
Tape tribe, 10 
tax system, 107-8 
Taylor, Clyde, 196, 197 
teachers, 90-91 

Technical Planning Secretariat (Secretaria 
Tecnica de Planificacion: STP), 103 
telecommunications, xvi, 149 
telephone service, 149 
temperature, 60-61 
Territorial Guard, 214 
textile industry, 139-40 
Thompson, George, 26 
timber, 128 
Timbu tribe, 7 

Tlatelolco Treaty (1967), 223- 
tobacco, 102, 119 
Torres, Diego de, 12 
tourism, 145, 153 

trade (see also exchange-rate policy; ex- 
ports; Generalized System of Prefer- 
ences; imports): 149-52; balance of 
payments, xv, 152-53; deficits, 150, 
152-53 

traditionalists in Colorado Party, xxii- 

xxiv, 174-77 
Trans-Chaco Highway, xvi, 87, 147 
transportation, 75, 145-48 
Treaty for the Prohibition of Nuclear 

Weapons in Latin America (Tlatelolco 

Treaty), xvii, 223 
Treaty of Itaipu (1973), 103, 131, 133, 

193, 194 

Treaty of October 11, 1811, 18, 19 
Treaty of the Triple Alliance, 27 
Treaty of Yacyreta, 133 
Treaty on the Non-Proliferation of 

Nuclear Weapons (1970), 223 
tung oil, 120 
Tupi tribe, 10 

UCR. See Radical Civic Union (Union 

Ci'vica Radical: UCR) 
UN. See United Nations (UN) 



unemployment, 111 

United Nations Commission for Latin 
America (ECLA), 103 

United Nations Economic Commission 
for Latin America and the Caribbean 
(ECLAC), 111 

United Nations (UN), xvii, 46, 192 

United States: agribusinesses in Paraguay 
of, 113-14, 118; direct investment in 
Paraguay by, 154; influence in Para- 
guay of, 44; military aid from, 43-44, 
46, 223, 227; policy toward Brazil of, 
38; policy toward Latin America: 
World War II, 38-39; relations of 
Paraguay with, 196-98; relations with 
Paraguay of, 25, 46-47, 196-98 

United States. Agency for International 
Development (AID), 144, 155 

United States. Drug Enforcement Admin- 
istration, 197 

universities, 90 

University Federation of Paraguay (Fed- 
eracion Universitaria del Paraguay: 
FUP), 190 

University of Cordoba, 18 

urbanization, 54, 78 

Uruguay, 27; war with Paraguay of, 26 

Vallemi, 141, 146 

Vargas Dornelles, Getulio, 102 

Vega, Luis Maria, 181-82 

Velasco, Bernardo de, 17 

Venezuela: aid from, 43 

Viceroy alty of Peru, 7, 14 

Viceroyalty of Rio de la Plata, 15 

Villa Elisa, 146 

Villa Elisa refinery, 135 

Villa Hayes, 243 

Villarrica, 60, 219, 225 

Villeta, 139, 146 

wages: minimum, 112; real, 112 
War of the Pacific (1879-84), 34 
War of the Seven Reductions (1750-61), 
14 

War of the Triple Alliance (1865-70), 3, 
4, 27-29, 63, 79, 84, 101, 113, 117, 
138, 161, 171, 203, 206, 224, 226 

Washburn, Charles A., 29 

weather conditions, 150, 151 

Western Paraguay (Paraguay Occiden- 
tal), 54 



285 



Paraguay: A Country Study 



wheat, 121-22 
White, Robert, 47, 196 
Williams, John Hoyt, 17 
winds, 60 

Women for Democracy, 196 
Women's Correctional Institute, 243 
World Bank, xvii, 108, 144; assistance 

from, 155 
World War II, 38 



Yacyreta hydroelectric power plant, 46, 
112, 130, 133-34, 146; effect of project 
for, 153 
Yegros, Fulgencio, 20, 161 
yerba mate, 13, 14, 102, 122, 128 
Ynsfran, Edgar, xxvi-xxvii, 43, 44, 176 
Yugoslavia, 192 

Zuccolillo, Aldo, 191 



286 



Published Country Studies 



(Area Handbook Series) 



550-65 


Afghanistan 


550-153 


Ghana 


550-98 


Albania 


550-87 


Greece 


550-44 


Algeria 


550-78 


Guatemala 


550-59 


Angola 


550-174 


Guinea 


550-73 


Argentina 


550-82 


Guyana 


550-169 


Australia 


550-151 


Honduras 


550-176 


Austria 


550-165 


Hungary 


550-175 


Bangladesh 


550-21 


India 


550-170 


Belgium 


550-154 


Indian Ocean 


550-66 


Bolivia 


550-39 


Indonesia 


550-20 


Brazil 


550-68 


Iran 


550-168 


Bulgaria 


550-31 


Iraq 


550-61 


Burma 


550-25 


Israel 


550-37 


Burundi/Rwanda 


550-182 


Italy 


550-50 


Cambodia 


550-30 


Japan 


RPiO— 1 fifi 

j jyj l uo 


C ameroon 




1 (J I Lla.il 


550-159 


Chad 


550-56 


Kenya 


550-77 


Chile 


550-81 


Korea, North 


550-60 


China 


550-41 


Korea, South 


550-26 


Colombia 


550-58 


Laos 


550-33 


(; r\m m nn w/f* £i 1 1 n P,annnpan 
V^UUlillvlXJ VVCaULll dl lUUCall, 


550-24 


T pnannn 

J_ ivUculUll 




Islands of the 






550-91 


Congo 


550-38 


Liberia 


550-90 


Costa Rica 


550-85 


Libya 


550-69 


Cote d' I voire (Ivory Coast) 


550-172 


Malawi 


550-152 


Cuba 


550-45 


Malaysia 


550-22 


Cyprus 


550-161 


Mauritania 


550-158 


Czechoslovakia 


550-79 


Mexico 


550-36 


Dominican Republic/Haiti 


550-76 


Mongolia 


550-52 


Ecuador 


550-49 


Morocco 


550-43 


Egypt 


550-64 


Mozambique 


550-150 


El Salvador 


550-88 


Nicaragua 


550-28 


Ethiopia 


550-157 


Nigeria 


550-167 


Finland 


550-94 


Oceania 


550-155 


Germany, East 


550-48 


Pakistan 


550-173 


Germany, Fed. Rep. of 


550-46 


Panama 



287 



550-156 


Paraguay 


550-89 


Tunisia 


550-185 


Persian Gulf States 


550-80 


Turkey 


550-42 


Peru 


550-74 


Uganda 


550-72 


Philippines 


550-97 


Uruguay 


550-162 


Poland 


550-71 


Venezuela 


550-181 


Portugal 


550-32 


Vietnam 


550-160 


Romania 


550-183 


Yemens, The 


550-51 


Saudi Arabia 


550-99 


Yugloslavia 


550-70 


Senegal 


550-67 


Zaire 


c cn 1 OA 

OOO-loO 


Sierra Leone 


000-/0 


Zambia 


550-184 


Singapore 


550-171 


Zimbabwe 


550-86 


Somalia 






550-93 


South Africa 






550-95 


Soviet Union 






550-179 


Spain 






500-96 


Sri Lanka 






550-27 


Sudan 






550-47 


Syria 






550-62 


Tanzania 






550-53 


Thailand 







288 



PIN: 006968-000 



